The marginal utility of the last unit of apples consumed is 10, and the marginal utility of the last unit of bananas consumed is 15. What set of prices for apples and bananas, respectively, would be consistent with consumer equilibrium?
A)$3 and $2
B)$2 and $3
C)$15 and $10
D)$25 and $30

Question

Quizplus · Accepted Answer

In consumer equilibrium, the ratio of the marginal utilities of two goods should equal the ratio of their prices. Thus, $ \frac{MU_{apples}}{MU_{bananas}} = \frac{Price_{apples}}{Price_{bananas}} $. Given $ MU_{apples} = 10 $ and $ MU_{bananas} = 15 $, the price ratio that maintains consumer equilibrium is $ \frac{10}{15} = \frac{2}{3} $, which corresponds to the prices in option B, $2 for apples and $3 for bananas.

The Marginal Utility of the Last Unit of Apples Consumed