Suppose hamburgers are on the horizontal axis and root beer on the vertical axis.You have a budget allowance of $10,and the price of hamburgers is $4 and root beer is $2.The slope of your budget constraint is _____.
A)0.5
B)2
C)2.5
D)5

Question

Quizplus · Accepted Answer

The slope of the budget constraint is the ratio of the prices of hamburgers to root beer, so in this case, it is 4/2=2. Therefore, the budget constraint equation is: 4h+2r=10, where h is the number of hamburgers and r is the number of root beers. To find the best choice, we need to look for the point on the budget constraint that gives us the highest level of utility. This will be the point that is on the budget constraint and also on the highest possible indifference curve. Without more information about the consumer's preferences, we cannot determine the exact combination of hamburgers and root beer that would be the best choice, but we know that it will be on the budget constraint and have a slope of 2.

Suppose Hamburgers Are on the Horizontal Axis and Root Beer