Why budget line is a straight line ?

A budget line shows the different combination of two goods which the consumer can consume given the income and the price of the two goods. 
A straight budge line depicts the constant slope of the budget line. The slope of the budget line given by the ratio of the price of the two goods (- P1/ P2). Constant slope and thereby, straight line is in accordance with the assumption that the prices of the two goods are given.  

  • 8
What are you looking for?