The graph of the budget line below has dollars on the vertical axis and food on the horizontal axis. Which statement is false?
A)The vertical intercept represents all money available for purchasing.
B)The distance OA shows the amount of money spent on OD amount of food.
C)If the amount of money available is known in this graph, then the absolute and relative price of food is known also.
D)The horizontal intercept represents all the food the consumer could purchase with the budget available.

Question

The graph of the budget line below has dollars on the vertical axis and food on the horizontal axis. Which statement is false? 
A)The vertical intercept represents all money available for purchasing. 
B)The distance OA shows the amount of money spent on OD amount of food. 
C)If the amount of money available is known in this graph, then the absolute and relative price of food is known also. 
D)The horizontal intercept represents all the food the consumer could purchase with the budget available.

Quizplus · Accepted Answer

The distance OA shows the total amount of money available, not the amount of money spent on a certain amount of food. The correct interpretation is that the distance OD shows the amount of money spent on a certain amount of food.

The Graph of the Budget Line Below Has Dollars on the Vertical