If the consumer's budget constraint is given by 10F + 5S = 100 where F is food and S is shelter, what is the opportunity cost of food in terms of shelter?
A)5
B)2
C)5.
D)10

Question

Quizplus · Accepted Answer

To find the opportunity cost of food in terms of shelter, we need to find the amount of shelter that the consumer needs to give up to obtain one more unit of food. This can be calculated by finding the slope of the budget constraint, which is -10/5 = -2. This means that for every one unit of food, the consumer has to give up 2 units of shelter. Therefore, the opportunity cost of food in terms of shelter is 2.

The best choice is B because it gives the correct answer and explanation.

If the Consumer's Budget Constraint Is Given by 10F