Assume that a consumer has a given budget or income of $10 and that she can buy only two goods, apples or bananas. The price of an apple is $2.00 and the price of a banana is $1.00. What is the slope of the budget line if the quantity of apples were measured on the horizontal axis and bananas on the vertical axis?
A)-0.5
B)-0.8
C)-1.6
D)-2

Question

Quizplus · Accepted Answer

The slope of the budget line is the negative ratio of the prices of the two goods. Since apples are on the horizontal axis and bananas on the vertical axis, the slope is - (Price of apples / Price of bananas) = - (2/1) = -2.

Assume That a Consumer Has a Given Budget or Income