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25 March, 15:31

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.

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Answers (1)
  1. 25 March, 17:12
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    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
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