budget line

(redirected from consumption possibility line)

Budget Line

An item in a budget. For example, the amount of money a company expects to spend in manager salaries may be listed as a budget line.
Budget lineclick for a larger image
Fig. 19 Budget line. If a consumer has an income of £10 and the price of good X is 50 pence and the price of good Y is £1, he can buy 20 units of X or 10 units of Y, or some combination of both, for example 10 units of X and 5 units of Y The slope of the budget line measures the relative prices of the two goods.

budget line


consumption possibility line

a line showing the alternative combinations of goods that can be purchased by a consumer with a given income facing given prices. See also CONSUMER EQUILIBRIUM, REVEALED PREFERENCE THEORY, PRICE EFFECT.