question_answer

Define a budget line.

Answer:

A graphical depiction of the various combinations of two selected products that a consumer can afford at specified prices for the products given their particular income level. When a typical business is analyzing a two product budget line, the amounts of the first product are plotted on the horizontal x-axis and the amounts of the second product are plotted on the vertical y-axis. Algebraically, a budget line is represented as follows.

\[{{P}_{1}}{{x}_{1}}+{{P}_{2}}{{x}_{2}}=M\]

Where,

\[{{P}_{1}}{{x}_{1}}\]represents the amount spent on good 1

\[{{P}_{2}}{{x}_{2}}\] represents the amount spent on good 2

M represents the income of the consumer