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the price of goods on the x axis in terms of the good on the y axis

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Q: What does the slope of a budget line reflect?
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What is a budget line and how is it useful in reaching consumer equilibrium?

it is a line showing all possible combinations of two goods(goods-1 and good-2) which a consumer can buy with his given money income and the price of the goods prevailing in the market.anywhere on the budget line the consumer spends his entire income on either good1 or good2 or both the goods. each point on the budget line indicates the different combinations of good1 and good2 which a consumer can buy with his income. in indifference curve analysis consumer attains his equilibrium when the slope of price line/budget line is equal to the slope of indifference curve.equilibrium is attained at that point where ic curve is tangent to the price line.....


A horizontal line has an undefined slope?

No, the slope of a horizontal line is 0. The slope of a vertical line is undefined.


What does the slope of the supply curve reflect?

Rising Marginal Costs


What is budget line and show the shift in budget line?

A budget line is a locus of combination of two goods a consumer can afford to buy with his/her income.shift in a budget line can be caused by various factors like a change in individuals income


Why is the budget line negatively sloped?

The budget line is negatively sloped because :- 1. MATHEMATICALLY * Given a budget line p1x1+ p2x2= M * where (x1,x2) is the budget bundle of good 1 and good 2 resp. ( i.e quantity bought of good 1 & 2 respectively) * p1 and p2 are the prevailing prices of good 1 and good 2; * M is the total budget; then, x2 = (M/p2) - (p1/p2)x1 where M/p2 is the intercept along the axis of good 2 and slope is -p1/p2 which is negative and thus there is a negative slope. 2. MEANING The slope of the budget line -(p1/p2) signifies the rate by which the consumer is ready to substitute good 1 for good 2. Consider a situation with a budget bundle (x1,x2) such that x1>x2.There would always be a point where the consumer would decline substituting good 1 for good 2 because he/she has more of good 1 and less of good 2 thus the rate of substituting declines giving a negative slope. Example:- A young guy likes to keep a collection of high end sports cars. He plans to buy 5 Bentley Azures and 2 Convertible Corvettes (notice the price difference between the two). In such a situation, it is very obvious for the person not to compromise on Corvettes for an extra Bentley. Note:- This phenomena can also be explained via Indifference Curves

Related questions

What is a slope'?

A smooth line drawn between points on a graph to reflect the general trend.


A change in the slope of a budget line is solely the result of a change in?

A change in the slope of a budget line is solely the result of a change in the consumer preference between two goods (A&B) given the cosumer's money income.


What does budget line show and what are its two basic properties?

Budget line(bl) is tangent to the indifference curve(ic) the slope of bl is same as that of ic.


At the point of consumer equilibrium the slope of the budget line is equal to the?

Marginal rate of substitution


What is the difference between a line with a slope of zero and no slope?

A line with slope of zero is horizontal. A line with no slope is vertical because slope is undefined on a vertical line.


What is the slope of a line perpendicular to a line whose slope is 3?

Slope of a line = m slope of perpendicular line = -1/m


What is a budget line and how is it useful in reaching consumer equilibrium?

it is a line showing all possible combinations of two goods(goods-1 and good-2) which a consumer can buy with his given money income and the price of the goods prevailing in the market.anywhere on the budget line the consumer spends his entire income on either good1 or good2 or both the goods. each point on the budget line indicates the different combinations of good1 and good2 which a consumer can buy with his income. in indifference curve analysis consumer attains his equilibrium when the slope of price line/budget line is equal to the slope of indifference curve.equilibrium is attained at that point where ic curve is tangent to the price line.....


What is the slope of a line that lies perpendicular to a line with a slope of 1 5?

The line perpendicular to a line with a slope of 1/5 has a slope of -5.


What do you need to use the point slope formula?

The slope of a line and the coordinates of a point on the line.The slope of a line and the coordinates of a point on the line.The slope of a line and the coordinates of a point on the line.The slope of a line and the coordinates of a point on the line.


What is the slope of a line that is perpendicular?

If the line has a slope of 2, then the perpendicular line has a slope of -1/2. The slope of a perpendicular line is the negative reciprocal. Another example would be if the slope of a line is -1/4, then the slope of the perpendicular is 4.


If the slope of the green line is -3 what is the slope of the red line?

The lines below are perpendicular. If the slope of the green line is -1, what is the slope of the red line?


The slope of a line is 2 3 what is the slope of a line that is parallel to it?

if the slope of a line is 2/3, then the slope of a parallel line would be 2/3.