Question

I have the correct answers for number 1 and 2. I just don't understand why it rotates counterclockwise from the intersection.

1. A consumer has $100 per day to spend on product A, which has a unit price of $7, and product 且which has a unit priceof $15 What is the slope of e budget line if good A is on the zontal axis and good B is on the vertical axis? C)-15/7 D) 7/15 7 2. In question 1, other things being equal, if the price of product B increases to $20 per unit, the budget line will, rotate counterclockwise from its intersection with the Product A axis. ) rotate clockwise from its intersection with the Product A axis C) rotate clockwise from its intersection with the Product B axis. D) experience a parallel inward shift toward the origin.

Answer 1

(1) (A)

Slope of budget line = -(Price of horizontal axis product / Price of vertical axis product) = -($7/$15) = -7/15

(2) (A)

If price of B increases, budget line will shift downward along vertical axis only, keeping horizontal intercept unchanged. This is a counterclockwise rotation from horizontal axis.