Budget Constraint

The limit to expenditure imposed by a cash-limited budget. Often represented as a straight line in geometrical representations of a consumer's choice possibilities between two goods or services, where it shows the limiting boundary of combinations of purchases that are possible with that budget. Sometimes termed 'budget line'. Often used in conjunction with

36 Budget Impact id o o

Budget constraint with slope = -price of X/price of Y

curve with this budget line

Highest attainable indifference

Good X

indifference curves to indicate the choice that would be made by a utility-maximizing individual.

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