Question

Question 2 4 pts You have a budget of $200 for a month and there are two goods you can consume, apples and melons. Each apple costs $1 and each melon costs $2. If you are consuming 50 apples, and would like to consume 50 melons. This NA Is part of the opportunity set INNS Means that we would be right on the budget constraint Would imply that we are spending more money than we have Implies an inefficient solution Question 3 4 pts

Answer 1

Budget = $ 200

Price of apple = $ 1

Price of melon = $ 2

The marginal rate of substitution can be determined as follows

MRS = P.

MRS = = 0.5

That is we can substitute 2 apple with 1 melon. But here it is given we consume 50 apples and 50 melon. Thus, the given combination is inefficient.

Or, we are consuming 50 apples and 50 melon. Total cost of basket = 50 × 1 + 50 × 2 = $ 150

Therefore, we are not maximizing our utility.

Last option is correct.

Implies an inefficient solution.

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