Figure 21-3
In each case,the budget constraint moves from BC-1 to BC-2.
-Consider two goods,books and CDs.The slope of the consumer's budget constraint is measured by the
A)consumer's income divided by the price of CDs.
B)relative price of books and CDs.
C)consumer's marginal rate of substitution.
D)number of books purchased divided by the number of CDs purchased.

Question

Figure 21-3
In each case,the budget constraint moves from BC-1 to BC-2.    
-Consider two goods,books and CDs.The slope of the consumer's budget constraint is measured by the
A)consumer's income divided by the price of CDs. 
B)relative price of books and CDs. 
C)consumer's marginal rate of substitution. 
D)number of books purchased divided by the number of CDs purchased.

Quizplus · Accepted Answer

The slope of the consumer's budget constraint is measured by the relative price of books and CDs. This is because the slope of the budget constraint is the opportunity cost of one good in terms of the other. In this case, it is the number of CDs that must be given up in order to purchase one more book (or vice versa), which is equal to the relative price of the two goods.

Figure 21-3 In Each Case,the Budget Constraint Moves from BC-1 to BC-2