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. This means that, in order to buy two bananas, this consumer must forgo
A) 1 apple.
B) 1.5 apples.
C) 0.5 apple.
D) 0.75 apple.

Question

Quizplus · Accepted Answer

To buy two bananas, the consumer spends $1.50 (2 x $0.75). This is the cost of 1 apple ($1.50), so she must forgo 1 apple.

Assume That a Consumer Has a Given Budget or Income