The following table presents information on Angel's marginal utility and price paid for the consumption of Pomegranates andOranges, which are the only two goods that he consumes.AngelOYesONOONot enough informationWhat should Angel do?PomegranatesPrice$4Based on the utility maximizing rule,Is Angel maximizing their utility?OPurchase more Pomegranates and less OrangesOPurchase less Pomegranates and more OrangesOMake no changesMarginal UtilityMacBook Air7OrangesPrice$12Marginal Utility31

Based on the utility maximizing rule, Is Angel maximizing their utility? OYes ONO ONot enough information What should Angel do? OPurchase more Pomegranates and less Oranges OPurchase less Pomegranates and more Oranges OMake no changes

Based on the utility maximizing rule, Is Angel maximizing their utility? OYes ONO ONot enough information What should Angel do? OPurchase more Pomegranates and less Oranges OPurchase less Pomegranates and more Oranges OMake no changes

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The following table presents information on Angel's marginal utility and price paid for the consumption of Pomegranates and
Oranges, which are the only two goods that he consumes.
Angel
OYes
ONO
ONot enough information
What should Angel do?
Pomegranates
Price
$4
Based on the utility maximizing rule,
Is Angel maximizing their utility?
OPurchase more Pomegranates and less Oranges
OPurchase less Pomegranates and more Oranges
OMake no changes
Marginal Utility
MacBook Air
7
Oranges
Price
$12
Marginal Utility
31

Expert Solution

Step 1

Utility maximisation level is the point where slope of Indifference curve is equal to the slope of budget line.

So consumption Optimisation bundle is at

MU x / MU y = Px / Py

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