Refer to Table 5.15 to answer this question.Suppose that the price of an apple is $2 and the price of a banana is $1 and this consumer has $8 to spend.In order to maximize her total utility,how many of each should she purchase?
A)1 apple and 6 bananas.
B)2 apples and 4 bananas.
C)3 apples and 2 bananas.
D)4 apples.
E)8 bananas.

Question

Quizplus · Accepted Answer

To maximize total utility with a budget of $8, the consumer should allocate their budget in a way that the marginal utility per dollar spent on apples equals the marginal utility per dollar spent on bananas. Without the specific utility values from Table 5.15, the general principle is to balance the marginal utility per dollar across all goods. Given the prices ($2 for an apple and $1 for a banana) and the budget ($8), option B (2 apples and 4 bananas) is a plausible distribution that could maximize total utility, assuming it aligns with the marginal utilities per dollar (which are not provided). This option utilizes the entire budget and allows for a mix of goods, which typically leads to higher total utility.