Suppose there are two goods,X and Y,with X being measured on the horizontal axis and Y being measured on the vertical axis.The budget line connecting these two goods does not:
A)show all the possible combinations of X and Y a consumer can buy given the level of income and prices.
B)have a positive slope.
C)have a slope that reflects the trade-off of one good for another.
D)reflect the assumption of continuous divisibility if drawn as a straight line.

Question

Quizplus · Accepted Answer

The budget line typically has a negative slope, reflecting the trade-off between two goods. If you spend more on one good, you have less to spend on the other, assuming a fixed budget.

Suppose There Are Two Goods,X and Y,with X Being Measured