Question

If the vertical axis drums which cost $20 per unit and the horizontal axis measures sticks which cost $10 a unit, the slope of the budget line is ______.

(clear explanation please)

A) -10

B) -3

C) -0.5

D) -2

Answer 1

So here we have drums measured in the vertical axis with cost $20 per unit and along the horinzontal axis we measure sticks which costs $10 a unit .

Considering the point along the vertical axis as E = (0,20) and along the horinzontal axis as F=(10,0)

Slope=change along the vertical axis / change along the horinzontal axis ,

        = (0-20)/(10-0), = -20/10 (as we know that the slope of the budget line is always negetive because of limited resource available to the consumer and they must give up some of one good to obtain more of the others).

        = -2 or D (Answer).