Given the money income and the price, the line, which shows all different combinations of two goods that a consumer can buy by spending all his income, is called

production line

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budget line

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income line

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none of these

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Solution

The correct option is B budget line
A budget line shows different combination of two goods, which a consumer can attain, given his income and market price of the goods.

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Similar questions

A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5 respectively. The consumer’s income is Rs 20.

(i) Write down the equation of the budget line.

(ii) How much of good 1 can the consumer consume if he/she spends his/her entire income on that good?

(iii) How much of good 2 can be consumed if he/she spends his/her entire income on that good?

(iv) What is the slope of the budget line?

A consumer wants to consume two goods. The prices of the two goods are Rs. 4 and Rs. 5 respectively. The consumer's income is Rs. 20.

(i) Write down the equation of the budget line.

(ii) How much of good 1 can the consumer consume if she spends her entire income on that good?

(iii) How much of good 2 can she consume if she spends her entire income on that good?

(iv) What is the slope of the budget line ?

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