A consumer has an income of $30,047. She consumes only two goods, tacos and beer
ID: 2441471 • Letter: A
Question
A consumer has an income of $30,047. She consumes only two goods, tacos and beer. Tacos cost $3.48 each and a bottle of beer costs $3.02. If tacos are on the vertical axis, what is the slope of the budget constraint? (Do not forget to include the sign and round to two decimal places)A consumer has an income of $30,047. She consumes only two goods, tacos and beer. Tacos cost $3.48 each and a bottle of beer costs $3.02. If tacos are on the vertical axis, what is the slope of the budget constraint? (Do not forget to include the sign and round to two decimal places)
A consumer has an income of $30,047. She consumes only two goods, tacos and beer. Tacos cost $3.48 each and a bottle of beer costs $3.02. If tacos are on the vertical axis, what is the slope of the budget constraint? (Do not forget to include the sign and round to two decimal places)
Explanation / Answer
Calculate the slope of the budget constraint -
Slope of the budget constraint = -Price of the good on vertical axis/Price of the good on horizontal axis
Tacos is taken on the vertical axis and beer is taken on the horizontal axis.
Price of taco = $3.48
Price of bottle of beer = $3.02
Calculate the slope of the budget constraint -
Slope = -Price of taco/Price of beer
Slope = -3.48/3.02
Slope = -1.15
The slope of the budget constraint is -1.15