Price line or Budget line

Price line or Budget line

Demand for a good depends upon (i) preference for that good and (ii) purchasing power. 

The preference pattern is represented by set of indifference curves. The purchasing power depends on his money income and price of the goods. The money income and price level are represented by budget line. The budget line is a downward sloping straight line connecting X axis and Y axis as follows.

OA – income, OA/OB price of X good. The budget line is the line joining various combinations of the two goods which the consumer can buy at given prices and income.