What is the horizontal intercept of the budget line,given that M = $1,000,P_X = $50,and P_Y = $40? A) 2000.0 B) 20.0 C) 25.0 D) 11.11

Question

Quizplus · Accepted Answer

The horizontal intercept of the budget line represents the maximum quantity of good X that can be purchased when all income is being spent on good X and none on good Y. 
To find the horizontal intercept, we need to set the price of Y equal to 0. 
So, the equation becomes: 
M = PS1U1B1X * X
$1000 = $50 * X
X = $1000 / $50
X = 20
Therefore, the horizontal intercept is 20. 
This means that the consumer can buy 20 units of good X when spending all their income on good X alone. 
Option B is the correct answer.

What Is the Horizontal Intercept of the Budget Line,given That