If the price of A is $12 and the price of B is $3, the budget line tells us that a consumer in effect can trade
A)12 units of A for 3 of B.
B)1 unit of A for 4 of B.
C)1 unit of A for 3 of B.
D)1 unit of B for 4 of A.

Question

Quizplus · Accepted Answer

The price ratio between A and B is 12:3, which simplifies to 4:1. This means for every 1 unit of A, a consumer can trade for 4 units of B, reflecting the relative price of A to B.

If the Price of a Is $12 and the Price