Question

The slope of the budget line is: negative, since to purchase more of one good means giving up some of the other good. zero, since both prices and income are assumed to be constant. positive, since income and prices are positively related. negative, because of the marginal rate of substitution.

Answer 1

Negative, since to purchase more of one good means giving up some of the other good.

Step-by-step explanation:

A budget line illustrates the number of goods, consumers are able to buy with lower income. Thus the price of goods and customers income to be spent on goods determine the budget line.

The slope of the budget line measures the opportunity cost of consuming Commodity A forgetting Commodity B. In order to get more of Commodity A, the consumer will have reduce the consumption of Commodity B Forefeiting the opportunity to consume Commodity B is the true opportunity cost of Commodity A and this measured by the slope of the budget line.

The slope of the budget line shows the amount of a commodityB the consumer must forfeit to purchase one more unit of a commodity A and the slope is usually Negative.