What determines the slope of the budget constraint
A)the relative price of commodities represented on the axes
B)the level of income of the consumer
C)the endowment of productive resources
D)the preferences of a consumer

Question

Quizplus · Accepted Answer

The slope of the budget constraint depends on the relative prices of the commodities represented on the axes. The budget constraint is a line that shows all the possible combinations of two goods that a consumer can purchase with a given budget, so the slope of the budget line is the ratio of the prices of those two goods. As the prices change, the slope of the budget line changes, and the consumer's budget constraint shifts.

What Determines the Slope of the Budget Constraint