Budget line represents the different possible combinations of two goods which can be purchased by consumer with the given income and at prevailing prices and the cost of each of these combinations is equal to the income of consumer.

Now, let’s say the income of a consumer is Rs 1000 and he has to buy apples and oranges. The price per kg apple is Rs 50 and apple is Rs 20. The possible outcomes could be –

The combinations A, B, C, D, E will be called budgets lines.