If the quantity of good A (Q_A) is plotted along the horizontal axis, the quantity of good B (Q_B) is plotted along the vertical axis, the price of good A is P_A, the price of good B is P_B and the consumer's income is I, then the slope of the consumer's budget constraint is: A) -Q_A/Q_B. B) -Q_B/Q_A. C) -P_A/P_B. D) -P_B/P_A. E) I/P_A or I/P_B.

Question

Quizplus · Accepted Answer

The slope of the consumer's budget constraint is given by the negative ratio of the prices of the two goods, which is -P_A/P_B. This represents the rate at which the consumer can trade off good A for good B while staying within their budget.

If the Quantity of Good a (QA) Is Plotted Along

If the Quantity of Good a (Q_A) Is Plotted Along