Results are out! Find what you need...fast. Get quick advice or join the chat
x

Unlock these great extras with your FREE membership

  • One-on-one advice about results day and Clearing
  • Free access to our personal statement wizard
  • Customise TSR to suit how you want to use it

Slope of a budget constraint

Announcements Posted on
Rate your uni — help us build a league table based on real student views 19-08-2015
  1. Offline

    ReputationRep:
    The normal way i've been calculating slope is via 'the rise over the run' - i.e slope = changeinY/changeinX

    for budget constraints, the textbook lists the slope as being

    slope = -price of good X/price of good Y

    in the one example I have, the two different calculations of the slope yield the same answer..soo i was wondering whether they always gave the same answer or whether this was just a concidence?

    it also gives another formula,

    changeinX = (changeinY x price of good Y)/ price of good X

    i was wondering how this formula gave the change in X? is there some simple algebra behind it that proves it that i'm missing?

    thanks
  2. Offline

    ReputationRep:
    (Original post by redkopite)
    The normal way i've been calculating slope is via 'the rise over the run' - i.e slope = changeinY/changeinX

    for budget constraints, the textbook lists the slope as being

    slope = -price of good X/price of good Y

    in the one example I have, the two different calculations of the slope yield the same answer..soo i was wondering whether they always gave the same answer or whether this was just a concidence?

    it also gives another formula,

    changeinX = (changeinY x price of good Y)/ price of good X

    i was wondering how this formula gave the change in X? is there some simple algebra behind it that proves it that i'm missing?

    thanks
    Should really post in the econ help forum, but anyhow... All of the above are the same thing...

    change(X) = (change(Y)*Py)/Px
    change(X)*Px = change(Y)*Py
    change(Y)/change(X) = -Px/Py (you have to stick a minus in because budget constraints are downward sloping).

    Take this example. You can work the budget eq as: y = -2x + 200, where Px=2 and Py=1. Slope = -Px/Py = -2, which is the same as dy/dx = -2

Reply

Submit reply

Register

Thanks for posting! You just need to create an account in order to submit the post
  1. this can't be left blank
    that username has been taken, please choose another Forgotten your password?
  2. this can't be left blank
    this email is already registered. Forgotten your password?
  3. this can't be left blank

    6 characters or longer with both numbers and letters is safer

  4. this can't be left empty
    your full birthday is required
  1. By joining you agree to our Ts and Cs, privacy policy and site rules

  2. Slide to join now Processing…

Updated: April 7, 2009
TSR Support Team

We have a brilliant team of more than 60 Support Team members looking after discussions on The Student Room, helping to make it a fun, safe and useful place to hang out.

New on TSR

Rate your uni

Help build a new league table

Poll
How do you read?
Quick reply
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.