-Figure 5-5 shows a consumer budget line for French fries and hamburgers.The household allocates a budget for these two goods.Suppose that the price of an order of French fries is $2, what is household income?

Question

Quizplus · Accepted Answer

To determine the household income based on the budget line for French fries and hamburgers, we need to know how many units of French fries the household can purchase with its entire budget if it spends all its income on French fries. Without the specific details from Figure 5-5, a common approach is to look at the intercepts of the budget line on the axes. Assuming the budget line intercepts suggest the household could buy 5 orders of French fries at $2 each, the household income would be 5 orders * $2/order = $10.

-Figure 5-5 Shows a Consumer Budget Line for French Fries