Budget Constraint
Plain definition
The budget constraint shows all the combinations of two goods a consumer can afford given their income and the goods' prices. Its slope equals the relative price — the rate at which the market lets you trade one good for the other.
In economics
The budget constraint is the can-afford half of consumer choice; preferences (indifference curves) are the want half. Utility is maximized where the highest indifference curve touches the budget line. Price changes rotate the constraint, income changes shift it in parallel — the geometry behind every demand curve.
Example
With 1,000 rupees, samosas at 20 rupees and chai at 10, you can buy at most 50 samosas, 100 chais, or any mix in between — the budget line connecting those intercepts. If chai's price doubles, the line rotates inward on the chai axis; your affordable set shrinks.
A common error is reading the budget line's slope as just a number rather than the market's exchange rate between the goods — the opportunity cost of one samosa in chais. Another is treating points inside the line as optimal: a utility maximizer with positive marginal utility never leaves money unspent, so the optimum always lies on the line itself.