Tonya, who is wealth, and Jerome, who is not, both buy orange juice and croissants for lunch at the student cafeteria. Their budget lines are drawn with orange juice on the vertical axis and croissants on the horizontal axis. Choose the correct statement.
A)Both of these budget lines have the same y-axis intercepts.
B)Both of these budget lines have the same x-axis intercepts.
C)Both of these budget lines have the same slopes.
D)Both of these budget lines have the same y-axis intercepts and x-axis intercepts.
E)These budget lines have different slopes, different x-axis intercepts, and different y-axis intercepts.

Question

Quizplus · Accepted Answer

The slope of a budget line is determined by the relative prices of the two goods, which are the same for both Tonya and Jerome. Therefore, their budget lines have the same slope. However, their intercepts differ due to different income levels.

Tonya, Who Is Wealth, and Jerome, Who Is Not, Both