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Assume the price of product Y (the quantity of which is on the vertical axis) is $15 and the price of product X (the quantity of which is on the horizontal axis) is $3. Also assume that money income is $60. The absolute value of the slope of the resulting budget line: A. is 5. B. is 1/5. C. is 4. D. is 20.

Respuesta :

TomShelby

Answer:

the correct answer is B 1/5

Explanation:

[tex] | \frac{y2 - y1}{x2 - x1} | = a[/tex]

we setup a matrix for two values of x and y:

y2 4 (60/15) all income in product Y

y1 0

x2 0

x1 20 60/3 all income in product X

now we calculate

[tex] | \frac{4 - 0}{0 - 20} | \\ | \frac{4}{ - 20} | = \frac{1}{5} [/tex]

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