The endpoints (horizontal and vertical intercepts) of the budget line:
A) measure its slope.
B) measure the rate at which one good can be substituted for another.
C) measure the rate at which a consumer is willing to trade one good for another.
D) represent the quantity of each good that could be purchased if all of the budget were allocated to that good.
E) indicate the highest level of satisfaction the consumer can achieve.

Question

Quizplus · Accepted Answer

The endpoints of the budget line represent the quantity of each good that could be purchased if all of the budget were allocated to that good. They do not indicate the slope, rate of substitution, willingness of trade, or highest level of satisfaction.

The Endpoints (Horizontal and Vertical Intercepts) of the Budget Line