The slope of a budget constraint line is influenced by which of the following?

• A. The total quantity of goods available in the market
• B. The consumer's preferences
• C. The relative prices of the two goods
• D. The consumer's income alone

Answer: (C)

Verified step by step guidance

1. Understand that the budget constraint represents all combinations of two goods that a consumer can purchase given their income and the prices of the goods.
2. Recall that the slope of the budget constraint is given by the negative ratio of the prices of the two goods, which can be expressed as \(-\frac{P_1}{P_2}\), where \(P_1\) and \(P_2\) are the prices of good 1 and good 2 respectively.
3. Recognize that the consumer's preferences do not affect the slope of the budget constraint; preferences determine the choice on the budget line but not the line itself.
4. Note that the total quantity of goods available in the market does not influence the slope; it may affect availability but not the relative prices or income.
5. Understand that the consumer's income affects the position (intercept) of the budget line but not its slope, which depends solely on the relative prices of the two goods.