If a consumer purchases only one good, she must be on either the vertical or the horizontal intercept of her budget line.

Question

Quizplus · Accepted Answer

This is true because if the consumer only purchases one good, all her income will be spent on that good, which means the quantity of the other good will be zero. The intercept on the horizontal axis (representing the good not purchased) will be zero, and the intercept on the vertical axis (representing the quantity of the purchased good) will be her total income divided by the price of the purchased good.

If a Consumer Purchases Only One Good, She Must Be