If a consumer purchases two goods, food (measured along the x-axis)and housing (measured along the axis), then what happens to the slope of the consumer's budget constraint if the price of food falls?

Question

Quizplus · Accepted Answer

The slope of the consumer's budget constraint represents the rate at which the consumer can trade one good for another, based on their prices. If the price of food falls, the consumer can buy more food for the same amount of money, effectively allowing them to reach a higher combination of food and housing. This change pivots the budget constraint outward (away from the origin) along the x-axis (food axis), and because the consumer can now get more food per unit of housing, the new slope is flatter, indicating a lower relative price of food to housing.

If a Consumer Purchases Two Goods, Food (Measured Along the X-Axis)and