What Does the Slope of the Budget Line Represent?

By Staff WriterLast Updated April 02, 2020

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.

If the prices of goods x and y remain the same, while the income to be spent on both decreases or increases, the slope of the budget line remains unchanged. A consumer must still give up the same amount of good y for one unit of good x, but the total number of good bundles that can be purchased decreases or increases respectively. The slope changes if the prices of goods change.