If there are two goods and if one good has a negative price and the other has a positive price, then the slope of the budget line will be positive.

Question

Quizplus · Accepted Answer

The slope of the budget line is determined by the ratio of the prices of the two goods. If one good has a negative price, then the budget line will still have a positive slope because the negative price will be cancelled out by the negative sign of the quantity of that good on the budget line equation.

If There Are Two Goods and If One Good Has