Use the following to answer questions 38-40:
Figure 4.14
-(Figure 4.14) For budget constraint 2, suppose that the price of good Y is $90 per unit. What is the price of good X?
A) $92
B) $88
C) $81
D) $102.24

Question

Use the following to answer questions 38-40:
Figure 4.14 
-(Figure 4.14) For budget constraint 2, suppose that the price of good Y is $90 per unit. What is the price of good X?
A) $92 
B) $88 
C) $81 
D) $102.24

Quizplus · Accepted Answer

The slope of the budget constraint is equal to the negative of the ratio of the prices of the two goods. The slope of budget constraint 2 is -1/2, so the ratio of the prices of goods X and Y is 2:1. If the price of good Y is $90 per unit, then the price of good X must be $90/2 = $45 per unit.

Use the Following to Answer Questions 38-40