A change in the slope of a consumer's budget constraint indicates a change in the ________.
A) price of either good purchased by the consumer
B) consumer's income
C) level of consumer satisfaction obtained from the consumption of both goods
D) consumer's tastes and preferences

Question

Quizplus · Accepted Answer

A change in the slope of the budget constraint indicates a change in the relative price of the goods purchased by the consumer. If the slope becomes steeper, then the price of one of the goods has increased or the price of the other good has decreased, while the consumer's income and preferences remain constant. Conversely, if the slope becomes flatter, then the price of one of the goods has decreased or the price of the other good has increased.

A Change in the Slope of a Consumer's Budget Constraint