Use this information to answer the following 4 questions:...

Use this information to answer the following 4 questions: Marie has a weekly budget of $\$ 24,$ which she likes to spend on magazines and pies.
What is Marie's opportunity cost of purchasing a pie?

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Key Concepts

Opportunity Cost

Opportunity cost is the value of the next best alternative that must be forgone when a decision is made. In economics, every choice has a cost since choosing one option means not being able to choose another. Here, determining the opportunity cost of buying a pie involves identifying what could have been purchased instead with the resources spent on the pie.

Budget Constraint

A budget constraint reflects the reality that consumers have limited income, which restricts the number and combination of goods they can afford. Marie’s weekly budget of $24 sets a cap on her spending decisions, requiring her to make choices between different goods such as magazines and pies.

Trade-Offs

Trade-offs refer to the compromises that emerge from limited resources; choosing more of one good typically means sacrificing some quantity of another. Understanding trade-offs is crucial in this context because Marie’s decision to buy a pie requires her to give up the opportunity to purchase magazines with the same amount of money.

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