Exhibit 20-3 Refer to Exhibit 20-3. 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 20-3  Refer to Exhibit 20-3. 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

Linda spends $5 a week on both apples and oranges, and both goods cost $1 per unit. Therefore, she buys 2.5 units of each good. Using the table in Exhibit 20-3, we can find the total utility from consuming 2.5 units of apples and 2.5 units of oranges:

Total Utility = (14 x 2.5) + (12 x 2.5) = 35 + 30 = 65

Therefore, Linda's total utility from consuming the optimal bundle of apples and oranges is 65. However, this answer choice is not given, so we must approximate by looking at the closest answer choice. The closest option is C, 88, which is higher than our calculated total utility. Therefore, the best choice is:

Answer: C