Figure 21-5

-Refer to Figure 21-5.In graph (b),what is the price of good Y relative to good X (i.e.,PY/PX)?
A) 1/3
B) 1
C) 3
D) 10

Question

Figure 21-5

-Refer to Figure 21-5.In graph (b),what is the price of good Y relative to good X (i.e.,PY/PX)?
A) 1/3 
B) 1 
C) 3 
D) 10

Quizplus · Accepted Answer

The slope of the budget constraint in graph (b) is -3. This means that for every unit of good Y that is purchased, three units of good X must be given up. Therefore, the relative price of good Y to good X is PY/PX = 3/1 = 3. 
The best choice depends on the consumer's preferences and utility. However, any point on the budget constraint B2 represents a feasible bundle of goods that the consumer can purchase given their income and the prices. The consumer can choose the bundle that maximizes their utility from among the feasible bundles on the budget constraint.

Figure 21-5 -Refer to Figure 21-5.In Graph (B),what Is the Price of 21-5.In