Question

Assume that a consumer has a given budget or income of $10 and that she can buy only two goods, apples or bananas. The price of an apple is $1.00 and the price of a banana is $0.50. This means that, in order to buy four bananas, this consumer must forgo

Answer 1

The question pertains to the concept of budget constraint in economics and how it relates to the purchase of apples and bananas with a given budget.

Step-by-step explanation:

The question is related to the concept of budget constraint in economics. A budget constraint represents the limit to how much of two goods a consumer can afford to purchase given their income and the prices of the goods.

In this case, the consumer has a budget of $10 and the prices of apples and bananas are given as $1.00 and $0.50 respectively.

To find out how many bananas the consumer can buy by forgoing apples, we need to determine how many apples can be purchased with the given budget first. With a budget of $10 and apple price of $1.00, the consumer can buy 10 apples.

Now, if the consumer wants to buy bananas instead of apples, they can divide their budget by the price of bananas, which is $0.50. So, $10 / $0.50 = 20 bananas can be bought.

Therefore, if the consumer decides to buy 20 bananas, they have to forgo buying 10 apples.