If the slope of the budget line is steeper than the slope of the indifference curve,and X is on the horizontal axis: A) the consumer is willing to give up more of good X to get an additional unit of good Y than is necessary under the current market prices. B) MRS P_X /P_Y. C) MRS = −P_X /P_Y. D) the consumer is willing to give up more of good Y to get an additional unit of good X than is necessary under the current market prices.

Question

If the slope of the budget line is steeper than the slope of the indifference curve,and X is on the horizontal axis: A) the consumer is willing to give up more of good X to get an additional unit of good Y than is necessary under the current market prices. B) MRS > P_X /P_Y. C) MRS = −P_X /P_Y. D) the consumer is willing to give up more of good Y to get an additional unit of good X than is necessary under the current market prices.

Quizplus · Accepted Answer

A steeper slope of the budget line means that the opportunity cost of good X is higher than the opportunity cost of good Y. Therefore, the consumer is willing to give up more of good X to get an additional unit of good Y than is necessary under the current market prices. This is reflected in the steeper slope of the budget line compared to the slope of the indifference curve.

If the Slope of the Budget Line Is Steeper Than