A change in the price of the good measured on the vertical axis changes ________ of the budget line.
A)the slope and y-intercept
B)the slope and x-intercept
C)the x- and y-intercepts but not the slope
D)only the slope
E)only the y-intercept

Question

Quizplus · Accepted Answer

A change in the price of the good measured on the vertical axis affects the slope (rise over run) of the budget line since it is the ratio of the prices of the two goods. It also affects the y-intercept since it is the maximum amount of the other good that can be purchased with a certain income and the new price of the good on the vertical axis.

A Change in the Price of the Good Measured on the Vertical