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Questions
Questions
Single choice

Options
A.Buy fewer of both goods
B.Buy more of both goods
C.Buy more bananas and fewer apples
D.Continue buying the same quantities of both goods
E.Buy more apples and fewer bananas
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Standard Answer
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Approach Analysis
To analyze the question, we first note the information given: apples have MU_last = 15 and price = $5, while bananas have MU_last = 12 and price = $3. Ricardo has $125 and currently buys 10 apples and 25 bananas, which exactly exhausts his budget since 10×$5 + 25×$3 = $50 + $75 = $125. Option 1: Buy fewer of both goods. Reducing quantities of both would lower total utility, sin......Login to view full explanation

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