The slope of the budget line measures the opportunity cost of consuming x 1 (or good 1). In order to get more of x 1 the consumer has to reduce the consumption of x 2 (or good 2).

Here, the slope of the budget constraint is p 1 / p 2 −p1/p2; so the magnitude of the slope of the budget line (like the MRT) is the “price ratio” p 1 / p 2 p1/p2.

Though we can easily just connect the X and Y intercepts to find the budget line representing all possible combinations that expend José’s entire budget, it is important to discuss what the …

Learn the budget line in economics with clear formula, graph, and solved examples. Perfect for CBSE, ISC, and CUET exam success.

Budget Line Slope = -Pc/Pb. All consumption bundles that lie below the budget line are affordable, but they do not optimize utility for the consumer and are therefore regarded as suboptimal i.e. …

Note that the slope of the budget constraint line equals the ratio of the two commodities’ cost, and the market rate of exchange (MRE) denotes this line. The MRE refers to the rate at which a …

We can find the slope of the budget line easily by rearranging equation 3.3 so that we isolate B on one side. Note that in our graph, B is the good on the vertical axis, so we will rearrange our …