Consider a consumer who divides his income between spending on good X and good Y.The opportunity cost of good X in terms of good Y is reflected by the

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The opportunity cost of good X in terms of good Y is reflected by the ratio of the price of X to the price of Y. This is because the ratio provides the relative prices of the goods and represents the sacrifice a consumer makes in terms of one good to obtain the other. For example, if the price of X is $5 and the price of Y is $2, the ratio is 5/2 or 2.5. This means that the consumer would have to give up 2.5 units of good Y to obtain 1 unit of good X. Therefore, the ratio of the price of X to the price of Y measures the opportunity cost of good X in terms of good Y.

Consider a Consumer Who Divides His Income Between Spending on Good