The slope of the budget line is
A) negative because of the marginal rate of substitution.
B) positive, since income and prices are positively related.
C) zero, since both prices and income are assumed to be constant.
D) negative, since to purchase more of one good means giving up some of the other good.

Question

Quizplus · Accepted Answer

The slope of the budget line is negative because it reflects the trade-off between two goods. To purchase more of one good, you must give up some quantity of the other good, assuming a fixed income and constant prices. This trade-off is represented by a downward sloping budget line.

The Slope of the Budget Line Is