Assume that a consumer can buy only two goods, a and b, and has an income of $100. the price of a is $10 and the price of b is $20. what is the slope of the budget line if a is measured horizontally and b is measured vertically?

The slope of the budget line is -0.5.

Explanation:

A consumer buys two goods, A and B.

The income of the consumer is $100.

The price of good A is $10.

The price of good B is $20.

A budget line shows the maximum possible combinations of two goods that a consumer can purchase by completely exhausting his/her income. The two goods are represented on two different axis.

Good A is measured on the horizontal axis, while good B is measured on vertical axis.

The slope of the budget line is

=

=

= - 0.5

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