Which of the following statements is correct?
A) Along the budget line, consuming more of one good implies consuming more of the other.
B) The slope of the budget line shows the opportunity cost of the good measured along the x-axis.
C) The slope of the budget line shows there is no tradeoff between the two goods because the consumer can buy each of them.
D) If the consumer's budget increases, the budget line shifts leftward and its slope does not change.
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

The slope of the budget line shows the opportunity cost of the good measured along the x-axis. It measures the amount of one good that must be given up to obtain one unit of the other good. The other statements are incorrect. A) Along the budget line, consuming more of one good may require consuming less of the other. B) The slope of the budget line shows the opportunity cost measured along the x-axis, not both goods. C) The slope of the budget line shows the tradeoff between the goods, indicating that if the consumer wants more of one good, they must give up some of the other. D) If the consumer's budget increases, the budget line shifts outward and its slope remains the same.

Which of the Following Statements Is Correct