If the quantity of Good Y is measured on the vertical axis, the quantity of Good X is measured on horizontal axis, the price of Good X is $50, the price of Good Y is $20, and the budget is $500, the vertical intercept of the budget line is
A) 25, the horizontal intercept is 10, and the slope is -0.4.
B) 20, the horizontal intercept is 50, and the slope is -0.4.
C) 10, the horizontal intercept is 25, and the slope is -2.5.
D) 50, the horizontal intercept is 20, and the slope is -2.5.

Question

Quizplus · Accepted Answer

The vertical intercept is found by dividing the budget by the price of Good Y ($500/$20 = 25), and the horizontal intercept is found by dividing the budget by the price of Good X ($500/$50 = 10). The slope is the negative ratio of the prices (-$20/$50 = -0.4).

If the Quantity of Good Y Is Measured on the Vertical