Mary is currently buying apples and oranges such that the last unit of apples has 30 units of utility and the last unit of oranges has 40 units of utility.She has allocated her entire budget.If the price of an apple is 10 cents and the price of an orange is 20 cents,to maximize her utility,what should Mary do?
A) buy more apples and fewer oranges
B) buy more oranges and fewer apples
C) continue to buy the same amounts of both goods
D) buy fewer apples and fewer oranges
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

Mary should buy more apples and fewer oranges because the marginal utility per cent spent on apples (30/10 = 3) is greater than that on oranges (40/20 = 2). To maximize utility, she should equalize the marginal utility per cent spent across goods.

Mary Is Currently Buying Apples and Oranges Such That the Last