Which of the following will lead to a change in the opportunity cost of buying a pen in terms of a pencil?
A) An increase in the consumer's income
B) A decrease in the consumer's income
C) A twofold increase in the prices of both pens and pencils
D) A twofold increase in the price of pens and a threefold increase in the price of pencils

Question

Quizplus · Accepted Answer

A change in the opportunity cost of buying a pen in terms of a pencil depends on the relative price of the two goods. Option D describes a scenario where the relative price of pens increases more than the relative price of pencils. Hence, it will result in an increase in the opportunity cost of buying a pen in terms of a pencil. The other options, A, B, and C, do not affect the relative price of pens and pencils and, therefore, do not alter the opportunity cost of buying a pen in terms of a pencil.

Which of the Following Will Lead to a Change in the Opportunity