The slope of the budget constraint line is: A)the ratio of the prices (p_x/p_y). B)the negative of the ratio of the prices (p_x/p_y). C)the ratio of income divided by price of y (I/p_y). D)none of the above.

Question

Quizplus · Accepted Answer

The slope of the budget constraint line is the ratio of the prices of the two goods, which is (p_x/p_y). However, since the budget constraint is typically drawn with y on the vertical axis, the slope as conventionally calculated will be negative. Therefore, the answer is B, which is the negative of the ratio of the prices. Choices A and C are not correct because they do not take the negative into account. Choice D is not correct because one of the other choices must be the correct answer.

The Slope of the Budget Constraint Line Is