Asked by Beatriz Sarai on Jun 13, 2024
Verified
The endpoints (horizontal and vertical intercepts) of the budget line:
A) measure its slope.
B) measure the rate at which one good can be substituted for another.
C) measure the rate at which a consumer is willing to trade one good for another.
D) represent the quantity of each good that could be purchased if all of the budget were allocated to that good.
E) indicate the highest level of satisfaction the consumer can achieve.
Budget Line
A graphical representation of all possible combinations of two goods that a consumer can purchase with a given budget at prevailing prices.
Intercepts
Points where a line or curve crosses the axes on a graph, typically used to describe the starting points of equations in coordinate geometry.
Satisfaction Level
A measure of how well goods or services meet or surpass customer expectations.
- Acquire knowledge of the budget constraint concept and how it illustrates the trade-offs faced by consumers due to their financial resources and the prices of items.
Verified Answer
BD
Bavan DhindsaJun 13, 2024
Final Answer :
D
Explanation :
The endpoints of the budget line represent the quantity of each good that could be purchased if all of the budget were allocated to that good. They do not indicate the slope, rate of substitution, willingness of trade, or highest level of satisfaction.
Learning Objectives
- Acquire knowledge of the budget constraint concept and how it illustrates the trade-offs faced by consumers due to their financial resources and the prices of items.