A consumer has an income of Rs 60. Good 1 (horizontal axis) costs Rs 6 and good 2 (vertical axis) costs Rs 10. Match List-I with List-II.
| List-I | List-II | ||
|---|---|---|---|
| (A) | Horizontal intercept of the budget line | (I) | 12 units |
| (B) | Vertical intercept of the budget line | (II) | 6 units |
| (C) | Horizontal intercept after the price of good 1 falls to Rs 5 | (III) | 8 units |
| (D) | Vertical intercept after income rises to Rs 80 | (IV) | 10 units |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A) - (IV), (B) - (II), (C) - (I), (D) - (III)
The horizontal intercept is income ÷ price of good 1, and the vertical intercept is income ÷ price of good 2.
| List-I | List-II | Reason |
|---|---|---|
| (A) Horizontal intercept of the budget line | (IV) 10 units | 60 / 6 = 10 |
| (B) Vertical intercept of the budget line | (II) 6 units | 60 / 10 = 6 |
| (C) Horizontal intercept after the price of good 1 falls to Rs 5 | (I) 12 units | 60 / 5 = 12. The vertical intercept stays at 6. |
| (D) Vertical intercept after income rises to Rs 80 | (III) 8 units | 80 / 10 = 8 |
NCERT (2026-27): “2.2.1 Budget Set and Budget Line … The budget line is a straight line with horizontal intercept M/p1 and vertical intercept M/p2. The horizontal intercept represents the bundle that the consumer can buy if she spends her entire income on bananas. Similarly, the vertical intercept represents the bundle that the consumer can buy if she spends her entire income on mangoes. …” “2.2.2 Changes in the Budget Set … Note that the vertical intercept of the new budget line is the same as the vertical intercept of the budget line prior to the change in the price of bananas. However, the slope of the budget line and horizontal intercept have changed after the price change. …” |