Question

Why is budget line called price line?

Answer 1

• The budget line is also known as the price line because it displays every possible combination of two items that a customer can purchase at a specific price and with a specific income.
• The ratio of the two commodities' prices determines the budget line's slope. It shows the market rate at which one good can be traded for another.
• The budget line is also referred to as the pricing line because its slope and location are entirely determined by the prices of products.