Exhibit 21-3

-Refer to Exhibit 21-3.Linda spends $5 a week on apples and oranges.If the price of both goods is $1 per unit,what is Linda's total utility from consuming the optimal bundle of goods?

Question

Exhibit 21-3
 
-Refer to Exhibit 21-3.Linda spends $5 a week on apples and oranges.If the price of both goods is $1 per unit,what is Linda's total utility from consuming the optimal bundle of goods?

Quizplus · Accepted Answer

From the graph, Linda's optimal bundle is where she consumes 7 apples and 5 oranges. 
The total cost of this bundle is $12 (7 apples x $1/apple + 5 oranges x $1/orange).
Therefore, Linda's total utility from consuming this bundle would be 88 (the highest point on the graph).

Exhibit 21-3 -Refer to Exhibit 21-3.Linda Spends $5 a Week on Apples