Use the following data to work Problems 1 and 2 . Sara's income is $\$ 12$ a week. The price of popcorn is $\$ 3$ a bag, and the price of a smoothie is $\$ 3$. Calculate Sara's real income in terms of smoothies. Calculate her real income in terms of popcorn. What is the relative price of smoothies in terms of popcorn? What is the opportunity cost of a smoothic?
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Step 1
Calculate Sara's real income in terms of smoothies: To find Sara's real income in terms of smoothies, we need to divide her income by the price of a smoothie. Real income in terms of smoothies = $\frac{\$12}{\$3}$ Real income in terms of smoothies = $4$ So, Show more…
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