Homework Answers
Question 7
We are planning to spend money on two goods - Gasoline and Snacks.
The cost of gasoline is $2 per gallon and the cost of snacks is $1 each. The total income is $50.
With respect to budget line, gasoline is taken on x-axis and snacks is taken on y-axis.
Calculate the x-intercept -
x- intercept = Total income/Price of gasoline(it is taken on x-axis)
x-intercept = $50/$2 = 25
Thus,
The x-intercept of the budget line is 25.
Hence, the correct answer is the option (d).
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