Changes in the Budget Line
Changes in the Budget Line
In a world in which consumers only buy two products, A and B, a budget line can be used to show how much of each they can buy.
Income and the comparative prices of A and B both change the budget line. The solid red line is the initial budget line. As you change the consumer's income, the price of A, or the price of B, the budget line changes (the dashed red line).