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Theory of consumer behaviour — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsTheory of consumer behaviour2 Marks
Question
Define a budget line. When can it shift towards right?
✓

Answer

It indicates the quantity of goods X and Y that a consumer can buy at a given level of income. Budget line is a limiting factor for the consumer beyond which he cannot go, that means a consumer can only afford to buy combinations that fall along his budget line or inside it. He cannot afford to buy combinations that are above his budget line.

It can shift to the right due to following reasons:

  1. When the level of income increases.
  2. When price of both goods fall.

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