Asked by Ashley Sanchez on Jul 30, 2024
Verified
The income of a consumer is $40, the price of A is $2, and the price of B is $6. If the quantity of A is measured vertically, then the slope of the budget line is
A) -3.0.
B) -0.5.
C) -0.33.
D) -2.5.
Budget Line
A graphical representation that shows all possible combinations of two goods that an individual can afford given their income and the prices of the goods.
Consumer Income
The total money earned by consumers from all sources, including wages, salaries, investments, and benefits, which impacts their purchasing power.
Price
The amount of money required to purchase a good or service, determined by factors such as supply and demand, production costs, and market competition.
- Learn how to construct and interpret budget lines and indifference curves.
Verified Answer
LT
Lamar TravisAug 05, 2024
Final Answer :
A
Explanation :
The slope of the budget line is calculated by dividing the negative of the price of the good on the x-axis (B) by the price of the good on the y-axis (A). Thus, the slope = -($6/$2) = -3.0.
Learning Objectives
- Learn how to construct and interpret budget lines and indifference curves.