Alex distributes his monthly income of $600 between two goods,movies and food.By spending his entire income on movies,he can enjoy a maximum of 20 movies.On the other hand,by spending his entire income on food he can consume a total of 60 units of food.Assume that food consumption is measured along the horizontal axis and the consumption of movies is measured on the vertical axis.Calculate the slope of Alex's budget line when the price of food increases to $20 while the price of movie remains unchanged.

Question

Quizplus · Accepted Answer

The slope of the budget line is calculated as the ratio of the change in the price of food to the change in the price of movies. In this case, the price of food increases from $10 to $20, while the price of movies remains unchanged. Therefore, the change in the price of food is $10, and the change in the price of movies is $0. Thus, the slope of the budget line is $10/$0 = -2/3.

Alex Distributes His Monthly Income of $600 Between Two Goods,movies