The marginal utility of the last unit of apples consumed is 12, and the marginal utility of the last unit of bananas consumed is 8. What set of prices for apples and bananas, respectively, would be consistent with consumer equilibrium?
A)$4 and $6
B)$6 and $4
C)$8 and $12
D)$16 and $9

Question

Quizplus · Accepted Answer

In consumer equilibrium, the ratio of the marginal utilities (MU) of two goods should equal the ratio of their prices. Thus, MU of apples/MU of bananas = Price of apples/Price of bananas. Given MU of apples is 12 and MU of bananas is 8, the price ratio that maintains consumer equilibrium is 12/8 or 3/2. Among the options, only option B ($6 and $4) reflects this ratio, as 6/4 = 3/2.

The Marginal Utility of the Last Unit of Apples Consumed