Suppose you own a courier service and you use two types of delivery vehicles - Model A,which costs $30 000 to purchase,and Model B,which costs $50 000 to purchase.You have a budget of $300 000 for the purchase of new vehicles.Which of the following statements best describes the shape of your budget line?
A)The budget line is concave to the origin,indicating that the opportunity cost of each model of vehicle increases with each additional unit purchased.
B)The budget line is convex to the origin,indicating that the opportunity cost of each vehicle decreases with each additional unit purchased.
C)The budget line is a straight line,indicating that the opportunity cost of each vehicle decreases with each additional unit purchased.
D)The budget line is a straight line,indicating that the opportunity cost of each model of vehicle is independent of how many are purchased.
E)The budget line is a straight line,indicating that the opportunity cost of each vehicle increases with each additional unit purchased.

Question

Quizplus · Accepted Answer

The budget line is a straight line because the opportunity cost of purchasing one model over the other remains constant, regardless of the number of vehicles purchased.

Suppose You Own a Courier Service and You Use Two