Final answer:
The statement that 'the budget line is steep when X is inexpensive relative to Y' is false. A less expensive X relative to Y results in a flatter budget line, as more of X can be bought relative to Y.
Step-by-step explanation:
The statement that 'the budget line is steep when X is inexpensive relative to Y' is false.
In economic terms, the budget line represents the combination of goods that a consumer can purchase given their income and the prices of the goods.
When good X is inexpensive relative to Y, the budget line becomes less steep, as more of good X can be purchased for a given amount of good Y.
Consider Line A and Line B: if Line A represents good X and Line B represents good Y, and good X is cheaper, then the budget constraint will be flatter because the consumer can afford to buy relatively more of good X.
Therefore, the steepness of the budget line is inversely related to the price of X relative to the price of Y.
Key Concepts and Summary: Understanding the behavior of the budget line is crucial in comprehending consumer choices.
A flatter line indicates that one good is cheaper relative to another, and this affects consumer consumption patterns within their budget constraints.