Asked by Brandon Trejo on May 09, 2024
Verified
The ratio of the prices of two products that a consumer could buy with a given fixed income is equivalent to the
A) marginal rate of substitution.
B) slope of the budget line.
C) income elasticity of demand for the two products.
D) price elasticity of demand for the two products.
Ratio of Prices
The comparative value of two or more goods or services, expressed as a quotient showing the cost relationship.
Fixed Income
A type of investment in which real return rates or periodic income is received at regular intervals and at reasonably predictable levels.
Slope of Budget Line
The rate at which one good can be exchanged for another without changing the overall spending, reflecting trade-offs in consumer choice.
- Scrutinize the impact that adjustments in prices have on the decisions of consumers and their financial constraints.
Verified Answer
NT
NEREYDA TERRONES QUINTANAMay 16, 2024
Final Answer :
B
Explanation :
The slope of the budget line represents the ratio of the prices of two goods, indicating how many units of one good a consumer must give up to purchase one more unit of another good, given a fixed income. This is directly related to the choices consumers make when allocating their income between different goods.
Learning Objectives
- Scrutinize the impact that adjustments in prices have on the decisions of consumers and their financial constraints.