Question

Suppose the price of an apple is $0.75, and the price of a banana is $0.50. If Hugh is maximizing his utility, and his marginal utility from consuming an apple is 24 utils, then his marginal utility from consuming a banana must be: O 12 utils. O 16 utils. O 32 utils. O 36 utils.

Answer 1

The price of apples is $0.75 per unit and the price of bananas is $0.50 per unit. The marginal utility from consuming an apple is 24 utils and it is given that the individual is maximizing the utility. So,

$\fn_phv \frac{MU_{A}}{P_{A}} = \frac{MU_{B}}{P_{B}}$

Where

MU_{​​​​​A}​ represents the marginal utility from consuming an apple.

MU_​​​B represents the marginal utility from consuming a banana.

P_​​A is the price of an apple.

P_{​​​​​​B} is the price of a banana.

Putting the values:

$\fn_phv \frac{24}{0.75} = \frac{MU_{B}}{0.50}$

$\fn_phv MU_{B}= \frac{0.50\times24}{0.75}$

$\fn_phv MU_{B}= 16$

Therefore, the marginal utility from consuming a banana is 16 utils. So, the correct answer is 'option b'.