Answer to Question #296848 in Microeconomics for Yanyan

Question

Given that income is $200 and the price of good Y is $40, what is the vertical intercept of the budget line? Show solutions

Answer 1

Budget Line Equation

$Y = P_xX + P_yY$

At vertical Intercept,

Quantity of Good X is Zero

$200 = 0 + 40Y$

$Y = \frac{200}{40}$

$Y= 5$

Quantity of Good Y or vertical intercept = 5