Assume That a Consumer Has a Given Budget or Income

question 107

Multiple Choice

Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. For this consumer, the opportunity cost of buying one more apple is

• A)0.5 of a banana.
• B)0.8 of a banana.
• C)1 banana.
• D)2 bananas.

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Definitions:

Double Declining-Balance Depreciation

An accelerated depreciation method that doubles the rate of straight line depreciation.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption or loss of value.

Declining Balance Depreciation

A depreciation method that applies a constant rate to the declining book value of an asset, resulting in accelerated depreciation.

Straight-Line Rate

A method of calculating depreciation or amortization by evenly spreading the cost of an asset over its useful life.