Marsha Mellow is very flexible.She consumes x and y.She says, "Give me x or give me y, I don't care.I can't tell the difference between them." She is currently endowed with 14 units of x and 3 units of y.The price of x is 3 times the price of y.Marsha can trade x and y at the going prices but has no other source of income.How many units of y will Marsha consume?
A)48
B)17
C)45
D)3
E)23

Question

Quizplus · Accepted Answer

Marsha is indifferent between x and y, so she will consume the good that is relatively cheaper. The price of x is 3 times the price of y, so y is relatively cheaper. Marsha has 14 units of x and 3 units of y, so she can trade 1 unit of x for 3 units of y. She will trade 11 units of x for 33 units of y, leaving her with 3 units of x and 36 units of y.

Marsha Mellow Is Very Flexible