The Absolute Value of the Slope of the Budget Constraint

question 35

Multiple Choice

The absolute value of the slope of the budget constraint is equal to

• A) the marginal rate of substitution between the two goods in question.
• B) the price of good on the vertical axis divided by the price of the good on the horizontal axis.
• C) the price of good on the horizontal axis divided by the price of the good on the vertical axis.
• D) quantity of the good on the vertical axis divided by the quantity of the good on the horizontal axis.

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Definitions:

Subsidiary Posting

A detailed entry process in accounting that involves recording transactions in subsidiary ledgers for a more comprehensive financial tracking.

General Ledger

A comprehensive record of all financial transactions over the life of a company, used to compile financial statements.

Cash Receipts

The accumulation of funds, usually through cash or checks, garnered by a company from its operational activities.

Accounts Payable

The amount of money a company owes to its suppliers or creditors for goods or services purchased on credit.