Question

Five consumers have the following marginal utility of apples and pears:
Consumer Marginal Utility of Apples Marginal Utility of Pears
Alex 5 9
Becky 5 10
Clancy 4 8
Eileen 4 10
Hubert 3 4
The price of an apple is $1, and the price of a pear is $2.
Which, if any, of these consumers are optimizing over their choice of fruit?
A) Alex
B) Becky
C) Clancy
D) Eileen
E) Hubert

Answer 1

Answer:

Becky and Clancy are optimizing over their choice of fruit

Explanation:

In order to find which these consumers are optimizing over their choice of fruit we would have to use the following formula:

Marginal utility of apples/Marginal utility of pears=price of apple/price of pear

For Alex =5/9>1/2

For Becky =5/10=1/2

For Clancy =4/8=1/2

For Eileen =4/10<1/2

For Hubert=3/4>1/2

Therefore, only Becky and Clancy are optimizing