A budget line illustrates all possible combinations of two goods that a consumer can purchase based on their income and the prices of the goods. The equation p1x1 + p2x2 = i represents the budget line, where p1 and p2 are the prices of the goods, x1 and x2 are the quantities, and i is the total income. The graphical representation helps visualize the affordable combinations of the two goods.

1. Understanding the Budget Line
An Introduction to Consumer Budget
Constraints

2. What is a Budget Line?
• A budget line represents all possible
combinations of two goods that a consumer
can purchase given their income and the
prices of the goods.

3. Equation of the Budget Line
• The budget line equation is:
• P₁X₁ + P₂X₂ = I
• Where:
• - P₁ and P₂ are the prices of Goods 1 and 2
• - X₁ and X₂ are the quantities of Goods 1 and 2
• - I is the total income

4. Graphical Representation of
Budget Line

5. Graphical Representation of
Budget Line
illustrates the combinations of two goods (Good 1 and Good 2) that a consumer can afford with the