Principles of Macroeconomics / Unit 1 MAC 0017 short lesson, about 20 seconds
The Budget Constraint
Captions available
The idea
A budget constraint shows every combination of two goods a person can buy when all income is spent at given prices. Its slope is the ratio of the two prices.
In practice
Points on or inside are affordable; points outside are not.
Where people slip
The line is straight because prices do not change with the quantity bought, which is what distinguishes it from the frontier.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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