The point where the budget line intersects the y-axis represents a combination of goods that contains
A) some of both goods.
B) only the good measured on the y-axis.
C) only the good measured on the x-axis.
D) no goods.
E) the quantity of the good measured on the y-axis that has zero marginal utility.

Question

Quizplus · Accepted Answer

The point where the budget line intersects the y-axis represents a combination of goods where only the good measured on the y-axis is consumed and none of the good measured on the x-axis is consumed. This is because the y-axis measures the quantity of one good and the x-axis measures the quantity of the other good. Therefore, the point where the budget line intersects the y-axis represents a combination of goods where the quantity of the good measured on the x-axis is zero.

The Point Where the Budget Line Intersects the Y-Axis Represents