Question

Chuck spends all his income on two goods: tacos and milkshakes. His income is $100, the price of tacos is $10, and the price of milkshakes is $2. Put tacos on the horizontal axis and milkshakes on the vertical axis. The vertical intercept for Chuck's budget line is equal to ________ units of milkshakes.

Answer 1

50 Units of milkshake

Step-by-step explanation:

The reason is that the maximum Chuck can purchase milkshakes is of $100 and spending these $100 will give access to 50 units of milkshakes. The vertical intercept for Chuck is 50 units which is the maximum number of quantity for Chuck which it can buy from his $100. So this intercept defines the feasible region for $100. Hence this intercept can be found by:

The vertical intercept for Chuck's budget line = $100 Income / $2 per milkshakes = 50 Units of milkshakes