Question

Assume that strawberries cost $1 and apples cost $2. If a consumer has $16, the bundle of goods that would maximize his utility per dollar and remain within his budget would be:________

a. 6 strawberries and 5 apples.
b. 2 strawberries and 3 apples.
c. 6 strawberries and 1 apples.
d. 0 strawberries and 4 apples.

Answer 1

A) 6 strawberries and 5 apples.

Step-by-step explanation:

If you have $16, your consumption possibilities frontier would be 8 apples or 16 strawberries, but other possible combinations include:

apples strawberries

8 0

7 2

6 4

5 6

4 8

3 10

2 12

1 14

0 16

Any of the above combinations should maximize the consumer's utility and remain within his budget.

Answer 2

a. 6 strawberries and 5 apples.

Step-by-step explanation:

$16 = 1s + 2a

Where s = strawberry and a = Apple

The above equation represents a budget constraint.

The bundle that would maximise utility:

$16 = 1(6) + 2(5)

16 = 6 + 10

I hope my answer helps you