Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.The slope of Faruq's budget line is equal to:
A)-1/5.
B)-5.
C)1/5.
D)5.

Question

Quizplus · Accepted Answer

The slope of the budget line is calculated by taking the negative of the price ratio of the two goods. Here, it's -($10/$2) = -5. This represents the rate at which Faruq can trade tacos for milkshakes, maintaining the same level of spending.

Faruq Spends All of His Income on Tacos and Milkshakes