Joe's income is $500, the price of food (F) is $2, and the price of shelter (S) is $100. Which of the following bundles is in Joe's opportunity set?
A) 50 units of food, five units of shelter
B) 200 units of food, two units of shelter
C) 100 units of food, one unit of shelter
D) 150 units of food, three units of shelter
C
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The real exchange rate, q, is defined as
A) the price of the foreign basket in terms of the domestic one. B) the price of the domestic basket in terms of the foreign one. C) the price of the foreign basket. D) the price of the domestic basket. E) the nominal exchange rate in terms of the domestic basket.
The optimal quantity of air pollution is
A) whatever amount of pollution is produced by the profit maximizing firm. B) found by equating the marginal benefits from further reductions in pollution and the marginal costs of further reductions in pollution. C) found by setting the quantity of air pollution equal to the quantity of water pollution. D) a meaningless concept since monetary values cannot be attached to problems associated with pollution.