Author Question: Michelle spends all of her income on mangos and rice. Mangos cost 2 per pound and rice costs 1.50 ... (Read 81 times)

Sufayan.ah · **on:** Jun 29, 2018

Michelle spends all of her income on mangos and rice. Mangos cost 2 per pound and rice costs 1.50 per pound.

If Michelle is spending all of her income and the marginal utility per dollar spent is 20 for the last pound of mangos purchased and 10 for the last pound of rice purchased, then A) Michelle is maximizing utility from her present consumption bundle.
B) Michelle should buy more rice and fewer mangos in order to maximize utility.
C) Michelle should buy more mangos and less rice to maximize utility.
D) None of the above answers is correct.

Question 2

Given the budget line in the figure above, the combination of chips that is NOT affordable is

A) a.
B) b.
C) c.
D) d.