If a consumer purchases two goods, food (measured along the x-axisaxis) and housing (measured along the y axis), then what happens to the slope of the consumer's budget constraint if the price of food falls?

Question

Quizplus · Accepted Answer

When the price of food falls, the consumer can buy more food for the same amount of money, causing the budget constraint to pivot outward along the x-axis. The slope becomes flatter because the price ratio of food to housing decreases.

If a Consumer Purchases Two Goods, Food (Measured Along the X-Axisaxis)