Sign In Sign Up Ask an AI advisor
supermkimbrel
supermkimbrel
12.08.2019 • 
Business

Shipping the good apples out?
suppose apples come in two quality levels, low quality and high quality. at a store in the apple-growing region, the price of low-quality apples is $3 per pound, and the price of high-quality apples is $6 per pound.
timmy lives in the apple-growing region and buys 8 pounds of each type. his marginal utility of low-quality apples is 9 utils and his marginal utility of high-quality apples is 18 utils.
is timmy maximizing his utility?
a. yes. the marginal utility of high quality apples is greater than the marginal utility of low quality apples.
b. no. the marginal utility per dollar of low-quality apples is greater than the marginal utility per dollar of high-quality apples.
c. no. the marginal utility per dollar of high-quality apples is greater than the marginal utility per dollar of low-quality apples.
d. yes. the marginal utility per dollar of each good is equal.
suppose that timmy moves to an area outside the apple-growing region. as a result of increased shipping costs, the price of both low-and high-quality apples increases by $2 per pound in his new area. suppose further that timmy is still able to consume 8 pounds of each type of apple. in this new scenario, is timmy maximizing his utility?
a. no. the marginal utility per dollar of high-quality apples is greater than the marginal utility per dollar of low-quality apples.
b. no. the marginal utility per dollar of low-quality apples is greater than the marginal utility per dollar of high-quality apples.
c. yes. the marginal utility of high quality apples is greater than the marginal utility of low quality apples.
d. yes. the marginal utility per dollar of each good is equal.

Solved
Show answers

Ask an AI advisor a question

I want advice