Why should consumer\'s equilibrium point be located on the budget line

1.	Why should consumer\'s equilibrium point be located on the budget line?
Answer» Because the consumer spent only that money which he has in his hands .It is shown in budget line that how much money he can spent to consume goods.<br>Only a point that lies on the budget line can be the equilibrium point because of the fact that only the combination of goods as represented by these points is affordable by the consumer given his income. On the other hand, the points that lie above the budget line are not affordable by the consumer, thereby, cannot be the equilibrium. In contrast to this, consumption bundles that lie below the budget line leave the consumer with some unspent income. This suggests that the consumer can have more of at least one of the goods and no less of the other. Thus, only a point on the budget line can be the equilibrium point for a consumer.

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