This graph shows three different budget constraints: A,B,and C. If Gary has budget constraint A,and the price of milk is $3 a gallon,what is Gary's income?
A)$9
B)$27
C)$12
D)Cannot answer this without knowing the price of soda.

Question

This graph shows three different budget constraints: A,B,and C.  If Gary has budget constraint A,and the price of milk is $3 a gallon,what is Gary's income?
A)$9 
B)$27 
C)$12 
D)Cannot answer this without knowing the price of soda.

Quizplus · Accepted Answer

Budget constraint A intersects the x-axis at 3, meaning that Gary can spend all of his income on milk if he wants to. Therefore, at this point, his income is $27 (since 9 gallons of milk, which is the maximum amount he can buy, would cost $27).

This Graph Shows Three Different Budget Constraints: A,B,and C