Question

Faruq spends all of his income on tacos and milkshakes. His income is $100, the price of tacos is $10, and the price of milkshakes is $2. Put tacos on the horizontal axis and milkshakes on the vertical axis. If Faruq spends all of his income, the opportunity cost of one taco equals _____ milkshakes.

Answer 1

Answer:

The correct answer is 5.

Explanation:

Faruq's income is $100. The price of tacos is $10. The price of milkshakes is $2.

If Faruq spends all his income on tacos he will be able to purchase

=  $\frac{100}{10}$

=  10 tacos

If Faruq spends all his income on milkshakes he will be able to purchase

= $\frac{100}{2}$

= 50 milkshakes

So out of his total income he can either have 50 milkshakes or 10 tacos.

The opportunity cost of a taco will be

= $\frac{whta\ is\ sacrificed}{what\ is\ gained}$

= $\frac{50}{10}$

= 5

Answer 2

The opportunity cost of one taco for Faruq will be equal to five milkshakes, when the price of one milkshake is $2 and the price of one taco is given as $10.

What is an opportunity cost?

An opportunity cost is defined as the amount of return one person undergoes for consuming one product, when there are multiple alternatives available to such person.

It has been provided above that the income of Faruq is $100. So, at $10 per taco, Faruq will be able to consume 10 tacos and at the rate of $2 per milkshake a total of 50 milkshakes can be consumed.

Thus, using the formula for the opportunity cost, the computed values will be applied as below,

$\rm Opportunity\ Cost\ of\ Taco= \dfrac{Sacrifice}{Gains}\\\\\rm Opportunity\ Cost\ of\ Taco= \dfrac{50}{10}\\\\\rm Opportunity\ Cost\ of\ Taco= 5$

Hence, it has been computed that the opportunity cost for one taco is five milkshakes for Faruq when the prices of taco and milkshake are $10 and $2 respectively and assuming that Faruq spends entire $100 on them.

Learn more about opportunity costs here:

https://brainly.com/question/17204577