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.Assuming that food consumption is measured along the horizontal axis and the consumption of movies is measured on the vertical axis,derive the slope of Alex's budget line.

Question

Quizplus · Accepted Answer

The slope of the budget line is calculated by dividing the change in the price of food by the change in the price of movies. In this case, the change in the price of food is $0 (since Alex can consume 60 units of food for $0) and the change in the price of movies is $600 (since Alex can enjoy 20 movies for $600). Therefore, the slope of the budget line is 0/600 = 0.

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