Notice that the slope of the budget constraint equals the relative price of the two
goods--the price of one good compared to the price of the other. A pizza costs 5
times as much as a pint of Pepsi,
christian dior shoes for women, so the opportunity cost of a pizza is 5 pints of
Pepsi. The budget constraint's slope of 5 reflects the tradeoff the market is offering
the consumer: 1 pizza for 5 pints of Pepsi.
Q U I C K Q U I Z : Draw the budget constraint for a person with income of
$1,
chi flat iron turbo 2,000 if the price of Pepsi is $5 and the price of pizza is $10. What is the slope
of this budget constraint?