If the quantity of tacos is measured along the horizontal axis and the quantity of movies is measured along the vertical axis, and the price of a taco is $2.00 while the price of a movie is $12, then the slope of the budget line is
A) -1/3.
B) -3.5
C) -1/6.
D) -6.

Question

Quizplus · Accepted Answer

The slope of the budget line is the opportunity cost of one good in terms of the other. In this case, the slope is the amount of movies that have to be given up to purchase one additional taco. The opportunity cost of one taco is 6 movies ($12 movie / $2 taco), therefore the slope is -6/1 or -6.

If the Quantity of Tacos Is Measured Along the Horizontal