A budget line is a comparison of the possibilities and desires of any consumer

In the economic life of any subject, one of therestrictions is income. This concept is still called "budget constraint" and means the availability of only those market solutions that will allow you to use the wallet of this consumer. Graphically, the budget constraint line is represented as a straight line. It outlines the scope of possibilities.

In other words, the budget line representsa range of options that have limitations for the consumer. Everyone compares his income and expenses, and as a result receives an individual budget.

For clarity of the representation of this conceptit is necessary to reduce the variety of products to only two goods - 1 and 2. In the case of spending all the income, only to purchase goods 1 on the vertical axis, we will see a point that will show the number of units of the consumed product. The specified amount can be determined by the consumer's income from one side and the price of the goods 1 - on the other.

In the case of spending funds for the purchase of goods 2, this will be reflected by a point on the horizontal axis. Thus, the consumer's budget line will be obtained by joining these two points.

Based on the described situation, you canformulate the following. Budget line - a set of points, each of which displays a combination in certain proportions of goods 1 and 2, the acquisition of which the consumer will spend his income in full. On the left side of the budget line, the points characterize all possible options for the consumer, i.e. it can actually acquire the combinations indicated in this zone of two goods (1 and 2). However, in this situation, the expenditure of the budget will not be fully observed. Considering the right side of the line, we can conclude that these combinations are formed by an amount greater than the generated consumer income.

Thus, the budget line itself and those points,which are located to the left of it, characterize the scope of acceptable values ​​for the choice of a certain consumer for a given amount of income and corresponding prices. The scope of choice will vary in size and shape, depending on the amount of income and the prices of goods 1 and 2.

With increasing funds, the budget line moves to the right parallel to its previous location. And with a decrease, this indicator moves to the left.

In the case where the price of one commodity changes, andthe cost of the second remains unchanged, the budget line changes the angle of inclination. For example, there is an increase in the price of goods 1. In this case, the consumer will spend all of his income on the purchase of this particular product. Therefore, the budget curve will cross the horizontal axis at the previous point, since the value of the goods 2 has remained unchanged. The vertical axis will cross the line at the lowest level. Thus, the field of consumer opportunities is reduced, and the budget line becomes more flat.

Like any economic concept, the budget constraint line has its properties:

1. Since the goods located on the budget line have an equivalent value, an increase in the volume of purchases of one product is possible only with a corresponding decrease in the purchase of another. That is why the curve acquires a negative slope in connection with the display of feedback variables.

2. As mentioned above, an increase in consumer income at constant prices will lead to a line moving parallel to the right. The reverse reaction with a decrease in income - the direct moves to the left. The general change in income can not change the slope of the straight line, just the coordinates of the points of intersection of the line with the coordinate axes change.