Let $I$ be the income of the consumer, $P _ { x }$ be the price of good $x$ and $P _ { y }$ be the price of good $y$. If good $x$ is measured along the horizontal axis and good $y$ is measured along the vertical axis, then the " $x$-intercept" measures the maximum amount of good $x$ that the consumer can afford, which can be expressed as which of the following?

Question

Quizplus · Accepted Answer

The x-intercept represents the point on the x-axis where the budget line intersects. At this point, all of the consumer's income is being spent on good x and none on good y. Therefore, the price of good x times the quantity consumed of good x equals the consumer's income, or $\frac {I}{P_x}$. Thus, the maximum amount of good x that the consumer can afford is $\frac {I}{P_x}$. The "x-intercept" on the graph represents the maximum amount of good x that the consumer can afford, given their income I and the prices of goods x and y. This means that the consumer spends all their income on good x and can purchase a maximum of I/Px units of good x. Therefore, the answer is C: I/Px.

Let III Be the Income of the Consumer PxP _ { x }Px​

Let $I$ Be the Income of the Consumer $P _ { x }$