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blondinia [14]
2 years ago
7

Buget Constraint. Suppose that Russ has budgeted $20 a month to by candy bars, music downloads, or some combination of both. If

Russ spends all his budget on candy bars he can obtain 40 bars a month; if he buys only downloads, he can buy 20 a month. Draw the Budget constraint line.
a. What is the price of a candy bar?
b. What is the price of a music download?
c. What is the opportunity cost of a music download?
d. What is the opportunity cost of a candy bar?
e. Would the opportunity cost of each good change if Russ decided to increase his monthly budget to $30 for the two items?
Business
1 answer:
GrogVix [38]2 years ago
5 0

Answer:

The answer to this question can be defined as follows:

Explanation:

Please find the graph in attachment.

In point a.

The candy bar price = \frac{20}{40} = \frac{1}{2} = \$ 0.50

 In point b.  

The music download price = \frac{20}{20} = \$ 1

In point  c.  

The opportunity cost for music download = \frac{\$ 1}{\$ 0.50} = 2 \ candy \ bar

In point d.  

The opportunity cost for a candy bar = \frac{\$ 0.50}{\$ 1} =  \$ 0.50 \ music \ download

In point e.  

The cost of opportunity won't change as the price of the items is constant.

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  I hope this answer helps you.

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