Explain the meaning of budget line. What can cause a change in it

1.	Explain the meaning of budget line. What can cause a change in it
Answer» <html><body><p></p>Solution :Budget line is a graphical representation of all <a href="https://interviewquestions.tuteehub.com/tag/possible-592355" style="font-weight:bold;" target="_blank" title="Click to know more about POSSIBLE">POSSIBLE</a> combinations of two goods which can be purchased with given income and prices, such that the cost of each of these combinations is equal to the money income of the consumer. <br/>An increase in income <a href="https://interviewquestions.tuteehub.com/tag/causes-910982" style="font-weight:bold;" target="_blank" title="Click to know more about CAUSES">CAUSES</a> the budget line to shift outward, parallel to the original line (<a href="https://interviewquestions.tuteehub.com/tag/holding-1028331" style="font-weight:bold;" target="_blank" title="Click to know more about HOLDING">HOLDING</a> prices constant). A decrease in income causes the budget line to shift inward, parallel to the original line (holding prices constant) so a consumer can buy <a href="https://interviewquestions.tuteehub.com/tag/less-1071906" style="font-weight:bold;" target="_blank" title="Click to know more about LESS">LESS</a> of both goods with less income.</body></html>

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