Question

A consumer has an income of $3,000. Wine costs $3 per glass, and cheese costs $6 per pound. Draw the consumer's budget constraint with wine on the vertical axis. What is the slope of this budget constraint?

Answer 1

To draw the consumer's budget constraint, plot different combinations of wine and cheese. The slope of the budget constraint can be found by dividing the change in wine by the change in cheese between two points on the line.

Step-by-step explanation:

In this scenario, the consumer has an income of $3,000. Wine costs $3 per glass, and cheese costs $6 per pound. To draw the consumer's budget constraint with wine on the vertical axis, we need to plot different combinations of wine and cheese that the consumer can afford.

To find the slope of the budget constraint, we divide the change in wine (vertical axis) by the change in cheese (horizontal axis) for two points on the line. Let's say the consumer can afford 500 glasses of wine and 250 pounds of cheese. If the consumer reduces the consumption of cheese by 50 pounds to 200, then they can afford 550 glasses of wine. The slope would be (550-500)/(200-250) = 5.