AP MicroeconomicsConsumer Choice
Budget Constraint
A budget constraint shows all combinations of goods a consumer can afford given their income and the prices of the goods.
It is drawn as a downward-sloping line whose slope equals the negative ratio of the two goods' prices. Points on the line spend all income; points inside are affordable but leave income unspent. A change in income shifts the line, while a price change rotates it.
Formula / Example
Income = (Pₓ × Qₓ) + (Pᵧ × Qᵧ).