Budget Constraint Flashcards
1
Q
What is the definition of a budget constraint?
A
It is the question of what can we afford
2
Q
What is the formula for budget constraint?
A
m=p1q1+p2q2
3
Q
What is the slope formula?
A
-p1/p2
4
Q
What are the intercepts?
A
m/p1 and m/p2
5
Q
What does the slope represent?
A
The opportunity cost of consuming good 1
6
Q
A
