When modeling consumer choice,the price ratio of the two products is the:
A) equilibrium exchange rate.
B) slope of the budget line.
C) point of tangency for equilibrium.
D) demand for the two products.

Question

Quizplus · Accepted Answer

The slope of the budget line is the ratio of the prices of the two products, also known as the price ratio. This reflects the opportunity cost of choosing one product over the other, which is the basis for consumer choice. Therefore, the correct answer is B.

When Modeling Consumer Choice,the Price Ratio of the Two Products