Answer to Question #143401 in Economics of Enterprise for Spha

Question

If budget lines had to be drawn on each of the two sets of indifference curves in the
diagram in Question 4.1.1, what would they describe and where would consumer
equilibrium be for each budget line on the diagram?

Answer 1

Budget line describes all possible combinatiins of two goods that can be consumed at particular amount of income. The consumer equilibrium would be in the points where each budget line intersects the appropriate indifference curve.