Movies are $10 a ticket, and DVD rentals are $5 a DVD. With movies on the vertical axis, the magnitude of the slope of the budget line is<\/p>\n\n\n\n
A) 1\/2.<\/p>\n\n\n\n
B) 2.<\/p>\n\n\n\n
C) 5.<\/p>\n\n\n\n
D) 10.<\/p>\n\n\n\n
The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n Correct Answer: B) 2<\/strong><\/p>\n\n\n\n This question is based on the concept of a budget line<\/strong>, a fundamental idea in microeconomics that shows all the combinations of two goods a consumer can afford given their income and the prices of the goods.<\/p>\n\n\n\n Let\u2019s assume the consumer has a fixed budget, say \\$100<\/strong>, to spend on movies<\/strong> and DVD rentals<\/strong>.<\/p>\n\n\n\n Let:<\/p>\n\n\n\n Then the budget constraint<\/strong> can be written as:<\/p>\n\n\n\n $$ We can rewrite this in the form of a linear equation to find the slope:<\/p>\n\n\n\n $$ This equation is in the format:<\/p>\n\n\n\n $$ So, the slope<\/strong> of the budget line is \u20130.5<\/strong>. However, since the question asks for the magnitude<\/strong> of the slope, we ignore the negative sign and focus on the absolute value<\/strong>, which is:<\/p>\n\n\n\n $$ But here’s the trick: the question specifies that movies are on the vertical axis<\/strong> and DVDs on the horizontal axis.<\/p>\n\n\n\n So:<\/p>\n\n\n\n The slope<\/strong> of the budget line is calculated as:<\/p>\n\n\n\n $$ BUT since the formula for slope is rise over run<\/strong>, and you\u2019re plotting movies<\/strong> (Y-axis) over DVDs<\/strong> (X-axis), the correct expression of the slope is:<\/p>\n\n\n\n $$ Therefore, the magnitude<\/strong> of the slope is 2<\/strong>.<\/p>\n\n\n\n Movies are $10 a ticket, and DVD rentals are $5 a DVD. With movies on the vertical axis, the magnitude of the slope of the budget line is A) 1\/2. B) 2. C) 5. D) 10. The correct answer and explanation is : Correct Answer: B) 2 Explanation: This question is based on the concept […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-475","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/475","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/comments?post=475"}],"version-history":[{"count":1,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/475\/revisions"}],"predecessor-version":[{"id":476,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/475\/revisions\/476"}],"wp:attachment":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/media?parent=475"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/categories?post=475"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/tags?post=475"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Explanation:<\/strong><\/h3>\n\n\n\n
\n
\n
10M + 5D = 100
$$<\/p>\n\n\n\n
M = \\frac{100}{10} – \\frac{5}{10}D \\Rightarrow M = 10 – 0.5D
$$<\/p>\n\n\n\n
M = \\text{intercept} – (\\text{slope}) \\times D
$$<\/p>\n\n\n\n
|\\text{slope}| = 0.5
$$<\/p>\n\n\n\n\n
\\text{Slope} = \\frac{\\text{Price of horizontal axis good}}{\\text{Price of vertical axis good}} = \\frac{5}{10} = 0.5
$$<\/p>\n\n\n\n
\\text{Slope} = -\\frac{Price of movies}{Price of DVDs} = -\\frac{10}{5} = -2
$$<\/p>\n\n\n\nFinal Answer: B) 2<\/strong><\/h3>\n","protected":false},"excerpt":{"rendered":"