The slope of a budget line equals minus the ratio of the
A)marginal utilities of the goods indicated on the two axes
B)total utilities of the goods indicated on the two axes
C)lowest possible consumption levels for each of the goods indicated on the two axes
D)prices of the goods indicated on the two axes
E)sum of the prices of the goods indicated on the two axes and the budget

Question

Quizplus · Accepted Answer

The slope of the budget line represents the rate at which one good can be exchanged for another. Specifically, it shows the ratio of the prices of the two goods. Thus, the correct choice is D, as the slope equals minus the ratio of the prices of the goods indicated on the two axes.

The Slope of a Budget Line Equals Minus the Ratio