What is the opportunity cost of an additional unit of food

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Ryan has $200 per week to spend on gas and food. The price of gas is $4/gallon and the price of food is $2 unit. (Show your work)

A. Sketch Ryan's budget constraint with gas on the y-axis

B. What is the opportunity cost of an additional unit of food in terms of gallons of gas?

C. Suppose that gas prices spike to $5 / gallon but the price of food remains constant. Sketch the new budget constraint with gas on the y-axis.

D. What is the opportunity cost of a gallon of gas in terms of food?

E. Explain the relationship between the slope of the budget constraint and the opportunity cost of gas in terms of food.

Reference no: EM13739545

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