Question

The slope of the budget constraint is affected by the consumer's income level. relative price of...

The slope of the budget constraint is affected by the

consumer's income level.
relative price of goods being consumed.
consumer's preferences.
preferences of other consumers.
amount of goods in the market.

Homework Answers

Answer #1

Budget constraint line is the combination of two goods which can be consumed in different quantities by an individual within the allocated income. With a change in the income level the budget constriant line itself shifts. The quantity to be consumed within a budget is for two goods which are labelled on the x and y axis. The budget constraint line is connecting the two goods combinations that can be consumed. Relative price changes in any of the goods changes the consumer preference of consumption. Hence, the slope of the budget constraint is affected by the relative price of goods being consumed.

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