13.1 Consumption Possibilities
MyEconLab Concept Video
How much you are willing to pay for a song depends on your income and on how much you want the song. We begin our study of consumption choices by looking at how income and prices limit what a person can afford. We describe the limit on buying plans by using a budget line. Let’s look at the budget line of Tina—a student like you.
The Budget Line
A budget line describes the limits to consumption possibilities. Tina has already committed most of her income to renting an apartment, buying textbooks, paying her campus meal plan, and saving a few dollars each month. Having made these decisions, Tina has a remaining budget of $4 a day, which she spends on two goods: bottled water and chewing ...
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