The vertical and horizontal axes intercepts of the budget line represent the:
A) quantity of goods that will be purchase if only that good is purchased.
B) preference of one good compared to another good.
C) quantity of each good that is outside the consumer's income.
D) only two choices that will spend the entire budget.

Question

Quizplus · Accepted Answer

The vertical and horizontal axis intercepts of the budget line represent the maximum quantity of each good that can be purchased if all of the consumer's budget is spent on that good alone, assuming prices and income remain constant. This does not involve preferences or choices outside the consumer's budget.

The Vertical and Horizontal Axes Intercepts of the Budget Line