Suppose there are 10 apples and 10 oranges in the economy. Joe is currently consuming 4 apples and 5 oranges, and Jane is consuming 6 apples and 5 oranges. At this allocation, Joe's marginal utility of apples is 3, and his marginal utility of oranges is 5. Jane's marginal utility of apples is 9. The current allocation is necessarily efficient if:
A) the price of apples is 60% of the orange price.
B) Jane's marginal utility of oranges is 6 at this point.
C) Joe's MRS equal the MRT.
D) Jane's marginal utility of oranges is 15 at this point.

Question

Quizplus · Accepted Answer

The Answer of Suppose there are 10 apples and 10 oranges in the economy. Joe is currently consuming 4 apples and 5 oranges, and Jane is consuming 6 apples and 5 oranges. At this allocation, Joe's marginal utility of apples is 3, and his marginal utility of oranges is 5. Jane's marginal utility of apples is 9. The current allocation is necessarily efficient if:
A) the price of apples is 60% of the orange price.
B) Jane's marginal utility of oranges is 6 at this point.
C) Joe's MRS equal the MRT.
D) Jane's marginal utility of oranges is 15 at this point.

Suppose There Are 10 Apples and 10 Oranges in the Economy