What is required to derive the slope of the budget line?

Amount of price change in good 1 and good 2

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Amount of quantity changed in good 1 and good 2

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Amount of income change

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None of the above

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Solution

The correct option is A Amount of price change in good 1 and good 2
The slope of the budget line is the is the ratio of the prices of good 1 and good 2. Hence, the other 3 options are invalid as slope of budget line is only related to the prices of the two goods with a fixed income.

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Similar questions

How does the budget line change if the price of good 2 decreases by a rupee but the price of good 1 and the consumer’s income remain unchanged?

Which of the following is the measurement of percentage change in quantity demanded due to a percentage change in the price of a good?

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