A Country Produces Only Apples and Bananas

question 63

Multiple Choice

A country produces only apples and bananas.Moving from point A to point B along its production possibilities frontier,5 apples are forgone and 4 bananas are gained.What is the opportunity cost of a banana?

• A) 4 apples
• B) 5/4 of an apple
• C) 4/5 of an apple
• D) 1 banana
• E) None of the above answers is correct.

---

Definitions:

Quantity Demanded

The amount of a product consumers are willing and able to purchase at a given price over a specified time period.

Income

The money received by an individual or business for work done, from investments, or from the sale of goods or services.

Cross-Price Elasticity

An index indicating the variation in demand for a particular item as a result of the price alteration of a different item.

Complements

Goods or services that are used together, such that the increase in demand for one results in an increase in demand for the other.