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 $2.00 and the price of a banana is $1.00. This means that, in order to buy six bananas, this consumer must forgo
A)3 apples.
B)0.8 apples.
C)6 apples.
D)2 apples.

Question

Quizplus · Accepted Answer

With a budget of $12, each apple costs $2 and each banana costs $1. To buy six bananas at $1 each, the consumer spends $6. Since each apple costs $2, the $6 spent on bananas could have been used to buy 3 apples ($6/$2 per apple = 3 apples).

Assume That a Consumer Has a Given Budget or Income