If a consumer purchases two goods, food (measured along the $x$ axis) and housing (measured along the $y$ axis), and if the price of food is $\$ 3$ per unit and the price of housing is $\$ 400$ per unit, then what is the slope of the consumer's budget constraint if the consumer has an income of $\$ 600$ ?

Question

Quizplus · Accepted Answer

The slope of the budget constraint is equal to the negative ratio of the price of food to the price of housing. In this case, the slope is $- 3 / 400$, because the price of food is $\$ 3$ and the price of housing is $\$ 400$. The consumer's budget line can be represented by the equation $3x + 400y = 600$. The budget constraint equation is: 
$3x + 400y = 600$

Solving for $y$ we get: 
$y = \frac{600}{400} - \frac{3}{400}x$
or 
$y = \frac{3}{4} - \frac{3}{400}x$

The slope of the budget constraint is the coefficient of $x$ which is $-3/400$. Therefore, the answer is B.

If a Consumer Purchases Two Goods, Food (Measured Along The x