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Question
A consumer wants to consume two goods. The prices of the two goods are Rs 4 and Rs 5 respectively. The consumer’s income is Rs 20.
What is the slope of the budget line?
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Solution
Slope of the budget line = `(-P_1)/(P_2)`
`=(-"Price of good " 1)/("Price of good " 2) = -4/5 = -0.8`
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