Which of these is TRUE regarding a household's budget line?
A) It reflects the preferences of the household.
B) Its slope is the ratio of income to the price of the cheaper good.
C) Its slope changes when income changes.
D) Its slope depends on the prices of the goods.

Question

Quizplus · Accepted Answer

The slope of a household's budget line depends on the prices of the two goods it considers. Specifically, it is determined by the ratio of the prices of these goods, reflecting how many units of one good a consumer must give up to purchase one more unit of the other good, holding income constant.

Which of These Is TRUE Regarding a Household's Budget Line