Question

Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75.

For this consumer, the opportunity cost of buying one more apple is :

a)0.5 of a banana.

b)2 bananas.

c)0.8 of a banana.

d)1 banana.

Answer 1

Answer:

b) 2 bananas.

Explanation:

Provided that

Given budget or income = $12

The price of an apple = $1.50

The Price of a banana = $0.75

Since if we equate this banana and apple price, the opportunity cost is

The price of an apple = The Price of a banana

$1.50 = 2 bananas

The price of one banana is $0.75, for two it is $1.50 after multiplying the price of one banana with two bananas