Tonya's budget constraint for gasoline (G) and clothes (C) each month can be expressed by the equation G = 100 - 2C. If the price of clothing is $10, the price of gasoline is _____ and the total amount of income spent on both clothing and gasoline each month is _____.
A) $5; $500
B) $2; $100
C) $1; $500
D) $2; $1,000

Question

Quizplus · Accepted Answer

The slope of the budget constraint (-2) represents the price ratio of clothes to gasoline. Since clothes cost $10, gasoline costs $5. The intercept (100) represents the maximum gasoline Tonya can buy if she spends nothing on clothes, implying a total budget of $500.

Tonya's Budget Constraint for Gasoline (G) and Clothes (C) Each