If the quantity of X is measured on the horizontal axis and the quantity of Y is measured on the vertical axis, the slope of the budget constraint will decrease if the:

Question

Quizplus · Accepted Answer

If the price of X decreases, the consumer can buy more X for the same amount of money, meaning they can consume more of both goods at the same time. This will result in a flatter budget constraint since the consumer has more options to choose from. Conversely, if the price of Y decreases, the consumer will be able to buy more of Y, but they will have to give up some of their X consumption, resulting in a steeper budget constraint. The marginal utility of X and the budget itself do not directly affect the slope of the budget constraint.

If the Quantity of X Is Measured on the Horizontal