When speaking of the price of the good measured on the horizontal axis relative to the price of the good measured on the vertical axis,which statement is true?
A)The steeper the slope of the budget line,the greater the relative price of the good measured on the horizontal axis.
B)The steeper the slope of the budget line,the smaller the relative price of the good measured on the horizontal axis.
C)The steeper the slope of the budget line,the greater the relative price of the good measured on the vertical axis.
D)The slope of the budget line is independent of relative prices.
E)The flatter the slope of the budget line,the greater the relative price of the good measured on the horizontal axis.

Question

Quizplus · Accepted Answer

The slope of the budget line represents the relative price of the two goods. The steeper the slope, the greater the opportunity cost of one good in terms of the other. Therefore, the good measured on the horizontal axis has a higher relative price compared to the other good measured on the vertical axis.

When Speaking of the Price of the Good Measured on the Horizontal