Homework Clinic
Social Science Clinic => Economics => Topic started by: Austinleez3 on Nov 23, 2022
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Budget Constraints
Suppose that Margaret has $30 per week to spend on cheese and crackers. The price of a pound of cheese is $1 and the price of a box of crackers is $5.
What is the opportunity cost of a box of crackers in terms of cheese? Please round your final answer to two decimal places.
Given Margaret's budget, what is the maximum amount of cheese she can purchase? Crackers?
◦ 0.20 pound of cheese,6 pounds of cheese, 30 boxes of crackers
◦ 5.00 pound of cheese, 30 pounds of cheese, 6 boxes of crackers
◦ 5.00 pound of cheese, 6 pounds of cheese, 30 boxes of crackers
◦ 0.20 pound of cheese, 30 pounds of cheese, 6 boxes of crackers
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0.20 pound of cheese, 30 pounds of cheese, 6 boxes of crackers
The opportunity cost of a box of crackers in terms of cheese is the ratio of the price of cheese to the price of crackers.
$1 per pound of cheese = $5 per box of crackers
$1/$5 = 1 box of crackers
0.20 = 1 box of crackers
If Margaret used her entire budget on cheese, she could purchase Budget/Price of Cheese = 30/1 = 30 pounds of cheese
If Margaret used her entire budget on crackers, she could purchase Budget/Price of Crackers = 30/5 = 6 boxes of crackers