Question

Suppose when the price of Apples is $13, the price of Bananas is $15, and the budget is $390. If Apples are on the x-axis and Bananas are on the y-axis, what is the slope of the Indifference Curve at the Utility Maximizing point?

Group of answer choices

−0.867

−1.15

−2

Not enough information to determine

Answer #1

Let Apples be represented by x and Bananas be represented by y

According to Utility maximizing condition we have:

MU_{x}/P_{x} = MU_{y}/P_{y}
where MU_{x} = Marginal utility of x and MU_{y} =
Marginal utility of y, P_{x} = Price of Apple = 13 and
P_{y} = Price of Bananas = 15.

Thus we have : MU_{x}/13 = MU_{y}/15

=> MU_{x}/MU_{y} = 13/15 = 0.867

Slope of Indifference curve = - MRS(Marginal rate of
substitution and as MRS = MU_{x}/MU_{y}

=> Slope of Indifference curve =
-MU_{x}/MU_{y} = -0.867(Negative sign means that
indifference curve is downward sloping)

Hence, the correct answer is **(a) -0.867**

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caramel apples. If the price of pumpkins is $4 each, and the price
of caramel apples is $2 each, which of the following must also be
true when he is maximizing her utility? Assume the quantity of
pumpkins is measured on the x axis, and the quantity of caramel
apples is measured on the y axis.
Options:
A. Jack's income is $28
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a. Evelyn currently has 40 apples and 5 bananas. What is
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showing all bundles that Evelyn likes exactly as well as the bundle
(40, 5).
b. Norah offers to trade Evelyn 15 bananas if she will give her
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Suppose Sophie receives utility from bananas and apples. If A =
# of apples Sophie consumes and B = # of Bananas she consumes,
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of having to buy whole amounts.
a) Income = Y, price of apples = p(a) and price of bananas =
p(b). Derive the demand for apples.
b) Say that apples only cost...

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a)Suppose A = 2 and B = 1. What is the marginal utility of each
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d)Suppose A = 2, B...

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George is making a consumption choice over apples (a) and
bananas (b). George’s preferences are represented by u (a, b)
=(2a^2)b where a > 0 and b > 0. Denote by f = (a, b) a fruit
bundle.
1. In terms of preference relations, how does George rank the
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each other?
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Jack maximizes her utility when he buys 6 pumpkins and 4 caramel
apples. If the price of pumpkins is $4 each, and the price of
caramel apples is $2 each, which of the following must also be true
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Scenario 5
Charlie has the utility function U ( X A , x B ) =
X1/2A X1/2B
where XA stands for the number of apples and
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Use the tangency condition to find the
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