Joe's income is $500,the price of food (F)is $2,and the price of shelter (S)is $100.Which of the following bundles is in Joe's opportunity set?

Question

Quizplus · Accepted Answer

Since Joe's income is $500, he can purchase a combination of food and shelter that costs $500 or less.

For option A, 50 units of food cost $100 and 5 units of shelter cost $500, which totals $600. This is higher than Joe's income, so this option is not in his opportunity set.

For option B, 200 units of food cost $400 and 2 units of shelter cost $200, which totals $600. This option is also not in his opportunity set.

For option C, 100 units of food cost $200 and 1 unit of shelter cost $100, which adds up to $300, leaving Joe with $200 to spend on other items. Since this option is affordable and provides enough shelter for Joe, option C is in his opportunity set.

For option D, 150 units of food cost $300 and 3 units of shelter cost $300, which adds up to $600. Similar to option A and B, this option is not in his opportunity set.

Therefore, the best choice for Joe is option C since it is in his opportunity set and affordable.

Joe's Income Is $500,the Price of Food (F)is $2,and the Price