The slope of a budget line reflects the: price ratio of the two products. A consumer maximizes total utility when she or he purchases the combination of the two products at which her or his budget line is tangent to an indifference curve. True. The increase in demand for iPods can be explained by:
A. If the respective prices of goods x and y are Px and Py, then the slope of the budget line is -Px/Py; it indicates the number of units of y that a consumer must give up in order to buy an additional unit of x.
The slope of the budget line represents the amount of good "y" the consumer must give up to purchase one more unit of a good "x." The budget line itself represents the number of good bundles a consumer can buy with limited income.
ADVERTISEMENTS: Read this article to learn about the slope and shift of the budget line! So far, we have discussed different combinations of two goods that provide same level of satisfaction. But, which combination, will a consumer actually purchase, depends upon his income (‘consumer budget’) and prices of the two commodities.
It is clear from above that the budget line will change if either the prices of goods change or the income of the consumer changes. Thus, the two determinants of the budget line are: (a) The prices of goods, and (b) The consumer’s income to be spent on the goods. Slope of the Budget Line and Prices of Two Goods:
What does the slope of a budget line reflect? Answer. Wiki User April 02, 2009 7:35PM. the price of goods on the x axis in terms of the good on the y axis. Related Questions .
25. The slope of a budget line reflects the: A. elasticity of demand for the two products. B. price ratio of the two products. C. amount of the consumer's income. D. utility ratio of the two products.
The slope of a budget line reflects the: A. desirability of the two products. B. price ratio of the two products. C. amount of the consumer's income. D. utility ratio of the two products. 87. Suppose Elroy's budget line is as shown on the above diagram.
Start studying Chapters 5-9 Macroeconomics. Learn vocabulary, terms, and more with flashcards, games, and other study tools. ... A change in the slope of a budget line is solely the result of a change in: ... The slope of a budget line reflects the:
The slope of a budget line reflects the Multiple Choice desirability of the two products. price ratio of the two products. amount of the consumer's income. 磁 Next > < Prev 5of 251 . Get more help from Chegg. Get 1:1 help now from expert Economics tutors ...