Goods X and Y

For the following questions, assume that good X is on the horizontal axis and good Y is on the vertical axis in the consumer-choice diagram. PX denotes the price of good X, PY is the price of good Y, and I is the consumer's income. Unless otherwise stated, the consumer's preferences are assumed to satisfy the standard assumptions.

-Refer to Goods X and Y.The relative price of good X in terms of good Y is always equal to
A) the magnitude of the slope of the budget line.
B) the marginal value of X in terms of Y.
C) the horizontal intercept of the budget line.
D) the vertical intercept of the budget line.

Question

Goods X and Y

For the following questions, assume that good X is on the horizontal axis and good Y is on the vertical axis in the consumer-choice diagram. PX denotes the price of good X, PY is the price of good Y, and I is the consumer's income. Unless otherwise stated, the consumer's preferences are assumed to satisfy the standard assumptions.

-Refer to Goods X and Y.The relative price of good X in terms of good Y is always equal to
A) the magnitude of the slope of the budget line.
B) the marginal value of X in terms of Y.
C) the horizontal intercept of the budget line.
D) the vertical intercept of the budget line.

Quizplus · Accepted Answer

The relative price of good X in terms of good Y is represented by the slope of the budget line in a consumer-choice diagram, where the slope is defined as the rate at which the consumer can trade good Y for good X, which is essentially the price of X relative to the price of Y.