Question

Assume the price of product Y (the quantity of which is on the vertical axis) is $15 and the price of product X (the quantity of which is on the horizontal axis) is $3. Also assume that money income is $60. The absolute value of the slope of the resulting budget line: A. is 5. B. is 1/5. C. is 4. D. is 20.

Answer 1

The absolute value of the slope of the resulting budget line is 5.

Step-by-step explanation:

The absolute value of the slope of the resulting budget line can be determined by dividing the price of product Y by the price of product X, since the slope represents the opportunity cost of one product in terms of the other. In this case, the slope is $15/$3 = 5. Therefore, the correct answer is A. The absolute value of the slope of the resulting budget line is 5.

Answer 2

the correct answer is B 1/5

Step-by-step explanation:

`| (y2 - y1)/(x2 - x1) | = a`

we setup a matrix for two values of x and y:

y2 4 (60/15) all income in product Y

y1 0

x2 0

x1 20 60/3 all income in product X

now we calculate

`| (4 - 0)/(0 - 20) | \\ | (4)/( - 20) | = (1)/(5)`