What is a budget line? What does its slope indicate?

The budget line for a household graphically represents all possible combinations of two commodities that it can purchase, given the prices of the commodities and some fixed amount of money at its disposal. Its slope is the amount of one commodity that the market requires an individual to give up to obtain one additional unit of another commodity without any change in the amount of money spent.

Economics

You might also like to view...

The ability of a firm to charge a price greater than marginal cost is called

A) market power. B) monopoly power. C) price-making power. D) cost-plus pricing.

Economics

Which of the following cities does NOT contain a Federal Reserve bank?

A) Cleveland B) Dallas C) Los Angeles D) Boston

Economics