Asked by Fatihah Masri on Jun 29, 2024
Verified
Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.The slope of Faruq's budget line is equal to:
A) -1/5.
B) -5.
C) 1/5.
D) 5.
Budget Line
A graphical representation of all possible combinations of two goods that can be purchased with a given budget at fixed prices.
Slope
A measure of the steepness or inclination of a line or surface, calculated as the ratio of the vertical change to the horizontal change between two points.
Tacos
A traditional Mexican dish consisting of a folded or rolled tortilla filled with various mixtures, such as seasoned meats, beans, cheese, and vegetables.
- Analyze the relationship between the price of goods and the slope of the budget line.
Verified Answer
KT
Katie TorresJul 02, 2024
Final Answer :
B
Explanation :
The slope of the budget line is calculated by taking the negative of the price ratio of the two goods. Here, it's -($10/$2) = -5. This represents the rate at which Faruq can trade tacos for milkshakes, maintaining the same level of spending.
Learning Objectives
- Analyze the relationship between the price of goods and the slope of the budget line.