Question

Consider Figure 1 to answer the questions that follow. Figure 1 represents a budget constraint for a person that is choosing to buy apples (A) and bread (B).

1. If someone tells you that the income of the person represented in Figure 1 is $20, What is the price of apples? Enter the number below with no dollar sign.

2. If someone tells you the price of bread (B) is $5, what value should "?" be? Enter the number below.

3. Imagine that the price of bread decreases, holding everything else constant. What would happen to the opportunity cost of bread? (hint: the slope could be helpful).

Answer 1

Answer: SCROLL BELOW AND READ!!!!!!!!

Explanation:

1. To determine the price of apples, we need to find the slope of the budget constraint line in Figure 1. The slope of the line represents the rate at which one good (apples) can be exchanged for another good (bread).

In this case, the slope of the line is given by the change in the quantity of bread (ΔB) divided by the change in the quantity of apples (ΔA).

From Figure 1, we can see that the change in the quantity of bread is 20 - ?, and the change in the quantity of apples is 0 - 10.

So, the slope of the line is (20 - ?) / (0 - 10).

Since the price of apples is the negative of the slope, we have:

Price of apples = -[(20 - ?) / (0 - 10)].

2. If the price of bread (B) is given as $5, we can use the budget constraint equation to find the quantity of bread (?).

From Figure 1, we can see that the budget constraint line intersects the y-axis (bread axis) at ? = 4.

So, the value of ? should be 4 when the price of bread is $5.

3. When the price of bread decreases while everything else remains constant, the budget constraint line will pivot outward from the y-axis (bread axis). This means that the consumer can now afford to purchase more bread with the same level of income.

The opportunity cost of bread represents the amount of apples that must be given up in order to obtain more bread.

Since the budget constraint line has pivoted outward, the opportunity cost of bread decreases. In other words, the consumer now has to give up fewer apples to obtain the same amount of bread as before.

This is because the slope of the new budget constraint line, which represents the rate of trade-off between apples and bread, becomes less steep. Thus, the opportunity cost of bread decreases when the price of bread decreases.

PLS LET ME KNOW IF THIS HELPED U AT ALL!!!!!!!!!!