Use the following to answer questions :
Figure 5A-1
-Refer to Figure 5A-1.What is the slope of the budget constraint?
A)-1.2.
B).83.
C)1.
D)-.83.
E)None of the above.

Question

Use the following to answer questions :
Figure 5A-1 
-Refer to Figure 5A-1.What is the slope of the budget constraint?
A)-1.2. 
B).83. 
C)1. 
D)-.83. 
E)None of the above.

Quizplus · Accepted Answer

The slope of the budget constraint is the ratio of the change in the price of good Y to the change in the price of good X. In this case, the change in the price of good Y is -1 and the change in the price of good X is 1.2. Therefore, the slope of the budget constraint is -1/1.2 = -0.83.

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