Explain why budget line is downward sloping?

The budget line is the locus of points showing different possible combinations of a set of 2 goods that a consumer can buy, given his income and the prices of the goods. It is a downward sloping line because (given the prices of goods X and Y, and the income of the consumer) more of good X (on the X-axis) can be purchased only when less of good Y (on the Y-axis) is purchased.

  • 0
What are you looking for?