Exhibit 20-3

-Refer to Exhibit 20-3. Assume that the price of oranges increases to $2, while the price of apples remains at $1, and Linda allocates $5 of the weekly food budget to purchasing apples and oranges. If Linda wants to maximize her utility, her new consumption bundle will consist of

Question

Exhibit 20-3
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-Refer to Exhibit 20-3. Assume that the price of oranges increases to $2, while the price of apples remains at $1, and Linda allocates $5 of the weekly food budget to purchasing apples and oranges. If Linda wants to maximize her utility, her new consumption bundle will consist of

Quizplus · Accepted Answer

Given the budget of $5, with apples costing $1 each and oranges now costing $2 each, Linda can maximize her utility by purchasing 3 apples ($3) and 1 orange ($2), totaling her budget of $5. This option allows her to buy the most with her limited budget while adjusting to the new price of oranges.

Exhibit 20-3 ​

Exhibit 20-3