Price Line or Budget Line (2)
Supposing a consumer has an income of Rs.4.00 to be spent on apples and oranges. Price of orange is Re. 0.50 per orange and that of apples Re. 1.0 per apple. With his given income and given prices of apples and oranges, the different combinations that a consumer can get of these two goods are show in Table below:
Table No. 1
Income (Rs.) – Apples (Re. 1.00) – Oranges (Re. 0.50)
4 – 0 – 8
4 – 1 – 6
4 – 2 – 4
4 – 3 – 2
4 – 4 – 0
It is clear from the table that if the consumer wants to buy oranges only then he can get a maximum 8 oranges with his entire income of Rupees four. On the other hand, if the consumer wants to buy apples only, then he can get a maximum 4 apples with his entire income of Rupees four. Within these two extreme limits, the other possible combinations that a consumer can get are 1 apple +6 oranges, 2 apples + 4 oranges, 3 apples +2 oranges.