Assume that a consumer spends a given budget on only two goods and that the prices of the two goods are constant. The budget line in this case would
A) definitely be a straight downward-sloping line.
B) possibly be a straight upward-sloping line.
C) be a curved graph bowed outward.
D) be a curved bell-shaped graph.

Question

Quizplus · Accepted Answer

The budget line is a straight line because the prices of the two goods are constant. The slope of the budget line represents the relative price of the two goods, and it remains constant. Therefore, the budget line must be a straight line, either upward-sloping or downward-sloping depending on the consumer's preferences and the relative prices of the two goods.

Assume That a Consumer Spends a Given Budget on Only