Nancy has $100 to spend on books and compact disks.Books cost $10 and compact disks cost $20.The slope of Nancy's budget constraint (where the quantity of books is on the horizontal axis)is:
A) -0.5.
B) -2.
C) -5.
D) -10.
E) none of the above.

Question

Quizplus · Accepted Answer

The slope of the budget constraint is the negative ratio of the prices of the two goods. Here, the price of books is $10 and the price of compact disks is $20, so the slope is -10/20 = -0.5.

Nancy Has $100 to Spend on Books and Compact Disks