The slope of the budget constraint line is
A) the ratio of the prices $\left( P _ { X } / P _ { Y } \right)$
B)the negative of the ratio of the prices $\left( P _ { X } / P _ { Y } \right)$
C)the ratio of income divided by price of Y $\left( I / P _ { Y } \right)$
D)none of the above.

Question

Quizplus · Accepted Answer

The slope of the budget constraint line represents the rate at which a consumer can trade one good for another, which is the negative of the ratio of the prices of the two goods. This is because the opportunity cost of consuming one good is the quantity of the other good given up in exchange, which is determined by the relative prices of the two goods. Therefore, the correct answer is B, which is the negative of the ratio of the prices (P_X/P_Y). The other options are incorrect, as they do not reflect the relationship between the slope of the budget constraint line and the prices of the goods.

The Slope of the Budget Constraint Line Is A) the Ratio

The Slope of the Budget Constraint Line Is
A) the Ratio