Given that income is $200 and the price of good Y is $40.What is the vertical intercept of the budget line?
A)8,000.
B)20.
C)1/5.
D)5.

Question

Quizplus · Accepted Answer

The equation for the budget line is:
Income = Price of good X * quantity of good X + Price of good Y * quantity of good Y
$200 = $x * Qx + $40 * Qy
Rearranging the equation, we get:
Qy = (-$x/$40) * Qx + ($200/$40)
The vertical intercept represents the quantity of good Y that can be purchased when Qx=0.
Substituting Qx=0 in the equation for Qy, we get:
Qy = ($200/$40) = 5
Therefore, the vertical intercept is 5.

Given That Income Is $200 and the Price of Good