Economics 9708 · AS & A Level · Utility and rational consumer behaviour

Utility and rational consumer behaviour — practice question

A household that uses all of its income to buy bananas and apples faces the following unit prices ($): bananas $2.50; apples $1.00. The household gains twice as much utility from the last banana consumed as from the last apple consumed. What action should the household take in order to maximise utility from consuming these fruits?

  • Adecrease consumption of bananas; increase consumption of apples
  • Bincrease consumption of bananas; decrease consumption of apples
  • Cno change in consumption of bananas; decrease consumption of apples
  • Dno change in consumption of bananas; increase consumption of apples

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