Beth consumes two goods, x₁and x₂, and her income is $120. The price of x₁is $10, and the price of
X₂is $5. Her budget line intersects the x₂axis at consumption bundle:

Question

Beth consumes two goods, x₁and x₂, and her income is $120. The price of x₁is $10, and the price of X₂is $5. Her budget line intersects the x₂axis at consumption bundle:

Quizplus · Accepted Answer

The budget line intersects the x2 axis at the point where all income is spent on good x2. Since the price of x2 is $5 and Beth's income is $120, she can purchase $120/$5 = 24 units of x2, leading to the point (0, 24).

Beth Consumes Two Goods, X1 and X2, and Her Income

Beth Consumes Two Goods, X₁and X₂, and Her Income