Sam buys petrol and coffee each week. In order to draw his budget line between petrol and coffee, Sam would have to know
A) only the prices of one litre of petrol and one kilogram of coffee.
B) only how much income he has available to spend on petrol and coffee.
C) only how much petrol he wants to buy and how much coffee he wants to drink.
D) both how much income he has to spend and the prices of one litre of petrol and one kilogram of coffee.

Question

Quizplus · Accepted Answer

To draw a budget line, one needs to know both the prices of the goods in question (in this case, petrol and coffee) and the total income available to spend on these goods. This allows for the calculation of the maximum quantities of each good that can be purchased with the given income, at their respective prices.

Sam Buys Petrol and Coffee Each Week