Mary Granola consumes tomatoes and nectarines. Mary's indifference curves are kinky. When she is consuming more tomatoes than nectarines, she is just willing to trade 3 tomatoes for 1 nectarine. When she is consuming more nectarines than tomatoes, she is just willing to trade 4 nectarines for 1 tomato. Let P1 be the price of nectarines, and P2 the price of tomatoes. Mary maximizes her utility subject to her budget constraint. (Hint: Sketch one of her indifference curves.)
A) When P1 > P2, she must consume only tomatoes.
B) When P1 > P2, she must consume 3 times as many tomatoes as nectarines.
C) When P1 > 3P2, she must consume only tomatoes.
D) When 4P1 > P2, she must consume only nectarines.
E) She must consume equal numbers of both.
Correct Answer:
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