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Question
Describe the slope of the budget line.
Describe the slope of the budget line.
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Solution
The correct option is B Downward sloping
In a budget line consumers can only purchase a combination of two goods with given income and prices. Therefore, if the consumer wants to purchase more of good x, then he/she has to buy less of good y. This leads to a downward sloping budget line.
In a budget line consumers can only purchase a combination of two goods with given income and prices. Therefore, if the consumer wants to purchase more of good x, then he/she has to buy less of good y. This leads to a downward sloping budget line.
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