Why consumer equilibriumbe located on budget line
Dear Student
It is because the consumer can get maximum satisfaction on any bundle only when it pertains with his budget limit. The budget line shows what a consumer can afford to spend within his given income and at the same time how he can get maximum satisfaction through it. Therefore at that point that lie on the budget line as he can afford to spend only within his given income and hence consumer equilibrium locates on budget line.
Regards
It is because the consumer can get maximum satisfaction on any bundle only when it pertains with his budget limit. The budget line shows what a consumer can afford to spend within his given income and at the same time how he can get maximum satisfaction through it. Therefore at that point that lie on the budget line as he can afford to spend only within his given income and hence consumer equilibrium locates on budget line.
Regards