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The slope of the budget line is a crucial concept in microeconomics. It represents the rate at which a
consumer can trade one good for another while maintaining the same level of utility. The slope of the
budget line is determined by the relative prices of the two goods and the consumer's income.
A steep slope indicates that the price of one good is relatively high compared to the other, while a
shallow slope indicates that the price of one good is relatively low compared to the other. The slope of
the budget line also determines the consumer's optimal consumption bundle, which is the combination
of goods that maximizes their utility subject to their budget constraint.
A change in the relative price of the two goods will cause the budget line to rotate around the intercept
on the y-axis, changing the slope and the optimal consumption bundle.
A change in income will cause the budget line to shift parallel to itself, changing the intercepts on both
axes but not the slope or the optimal consumption bundle.