**Transcript for Educational Website**---**Understanding Opportunity Cost: Apples vs. Bananas***Scenario:*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 $2.00 and the price of a banana is $1.00. For this consumer, the opportunity cost of buying one more apple is calculated in terms of how many bananas must be forgone.*Analysis:*To find the opportunity cost of buying one more apple, consider the following steps:1. **Current Prices:** - **Apple:** $2.00 each - **Banana:** $1.00 each2. **Budget:** - Total available: $103. **Opportunity Cost:** - Buying an additional apple costs $2.00. - The $2.00 spent on an apple could instead buy 2 bananas ($2.00 ÷ $1.00 per banana). - Therefore, the opportunity cost of buying one more apple is 2 bananas.Understanding this trade-off helps consumers make informed decisions regarding allocating their budget for maximum satisfaction.--- No graphs or diagrams were present in the image.

Opportunity cost is the correlation of one economic choice to the following most ideal decision.…

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 $2.00 and the price of a banana is $1.00. For this consumer, the opportunity cost of buying one more apple is

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 $2.00 and the price of a banana is $1.00. For this consumer, the opportunity cost of buying one more apple is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

**Transcript for Educational Website**

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**Understanding Opportunity Cost: Apples vs. Bananas**

*Scenario:*

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 $2.00 and the price of a banana is $1.00. For this consumer, the opportunity cost of buying one more apple is calculated in terms of how many bananas must be forgone.

*Analysis:*

To find the opportunity cost of buying one more apple, consider the following steps:

1. **Current Prices:**
- **Apple:** $2.00 each
- **Banana:** $1.00 each

2. **Budget:**
- Total available: $10

3. **Opportunity Cost:**
- Buying an additional apple costs $2.00.
- The $2.00 spent on an apple could instead buy 2 bananas ($2.00 ÷ $1.00 per banana).
- Therefore, the opportunity cost of buying one more apple is 2 bananas.

Understanding this trade-off helps consumers make informed decisions regarding allocating their budget for maximum satisfaction.

---

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