📚 Learning Guide
Marginal Utility and Consumer Choice
medium

Maria has a budget of $10 to spend on apples and oranges. Apples cost $2 each and oranges cost $1 each. If Maria decides to buy 3 apples, how should she allocate her remaining budget to maximize her total utility, considering the marginal utility she receives from each fruit? Assume she derives more satisfaction from each additional orange than from an additional apple after the third apple.

Master this concept with our detailed explanation and step-by-step learning approach

Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
Explore Topic

Choose the Best Answer

A

Buy 4 oranges

B

Buy 2 oranges and save $2

C

Buy 3 oranges

D

Buy 1 orange and save $3

Understanding the Answer

Let's break down why this is correct

Answer

Maria starts with a budget of $10 and spends $6 on 3 apples, since each apple costs $2. This leaves her with $4 to spend on oranges. Since she gets more satisfaction from each additional orange than from another apple after the third apple, she should use her remaining budget to buy oranges. At $1 each, she can buy 4 oranges, which gives her more total utility than if she spent the money on more apples. By choosing to buy oranges, Maria maximizes her satisfaction with her budget.

Detailed Explanation

Maria spends $6 on 3 apples. Other options are incorrect because This choice suggests saving money is better than getting more fruit; Buying 3 oranges doesn't use all her money.

Key Concepts

Marginal Utility
Consumer Choice
Budget Constraint
Topic

Marginal Utility and Consumer Choice

Difficulty

medium level question

Cognitive Level

understand

Ready to Master More Topics?

Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.