-Consider the budget line in the above figure. If the consumer has income of $240, what is the relative price of movies?
A)0.42 books
B) 2.4 books
C) $10 per movie
D) $24 per movie

Question

-Consider the budget line in the above figure. If the consumer has income of $240, what is the relative price of movies?
A)0.42 books 
B) 2.4 books 
C) $10 per movie 
D) $24 per movie

Quizplus · Accepted Answer

The relative price of movies is the slope of the budget line, which is the change in the number of books that the consumer can buy for a one-unit increase in the number of movies that they buy. In this case, the slope is -0.42, which means that the consumer can buy 0.42 fewer books for each additional movie that they buy.

-Consider the Budget Line in the Above Figure