The slope of the budget constraint is affected by the
A)consumer's income level.
B)relative price of goods being consumed.
C)consumer's preferences.
D)preferences of other consumers.
E)amount of goods in the market.

Question

Quizplus · Accepted Answer

The slope of the budget constraint is determined by the relative price of goods being consumed. As the price of one good increases relative to the other, the slope becomes steeper, reflecting the fact that a greater amount of the other good must be given up in order to consume the same amount of the more expensive good. Changes in income, preferences, or the amount of goods in the market do not affect the slope of the budget constraint. The preferences of other consumers may affect market prices, but this would be reflected in the relative price of the goods being consumed, which is already accounted for.

The Slope of the Budget Constraint Is Affected by the