The quantity of good A is measured along the vertical axis, and the quantity of good B is measures along the horizontal axis. If the price of Good A falls
A) the vertical intercept of the budget line moves along the vertical axis away from the origin.
B) the vertical intercept of the budget line moves along the vertical axis toward the origin.
C) the horizontal intercept (along Good B) of the budget line will increase.
D) none of the above

Question

Quizplus · Accepted Answer

When the price of Good A falls, consumers can afford to buy more of Good A for the same amount of money, which means the vertical intercept of the budget line (representing the maximum quantity of Good A that can be purchased if all income is spent on Good A) moves away from the origin.

The Quantity of Good a Is Measured Along the Vertical