Q19. The slope of consumer's budget line is:
a) Positive and constant
b) Negative and decreasing
c) Negative and constant
d) Positive and increasing
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The slope of the consumer's budget line is negative and decreasing.
What is the slope of the consumer's budget line?
- The difference in the ratio of prices between two goods let's say good 1 and good 2 is called the slope of the budget line.
- If we divide the prices of good 1 and good 2 and then draw their ratio on a coordinate system then we will get a slope.
- Such as the price of goods on the x-axis divided by the prices of other goods on the y-axis.
- Looking at the slope, we will get to know that the slope of the budget line is always downward and negative.
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