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 vertical intercept of the budget line represents the maximum amount of good Y that can be purchased when there is no income allocated towards other goods. This occurs when all the income is spent on good Y, therefore:
Vertical Intercept = Income/Price of Good Y
Vertical Intercept = $200/$40
Vertical Intercept = 5

Given That Income Is $200 and the Price of Good