Suppose There Are 10 Apples and 10 Oranges in the Economy

question 74

Multiple Choice

Suppose there are 10 apples and 10 oranges in the economy. Joe is currently consuming 4 apples and 5 oranges, and Jane is consuming 6 apples and 5 oranges. At this allocation, Joe's marginal utility of apples is 3, and his marginal utility of oranges is 5. Jane's marginal utility of apples is 9. The current allocation is necessarily efficient if:

• A) the price of apples is 60% of the orange price.
• B) Jane's marginal utility of oranges is 6 at this point.
• C) Joe's MRS equal the MRT.
• D) Jane's marginal utility of oranges is 15 at this point.

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Definitions:

Overallocation of Resources

A situation where resources are distributed or utilized excessively in one area at the expense of others, leading to inefficiency.

Rising Health Care Costs

The increase in the price of services and goods within the healthcare sector over time, affecting consumers, insurers, and government budgets.

Real Wages

Wages adjusted for inflation, representing the purchasing power of income earned from work.

Fringe Benefit

Additional compensation provided to an employee beyond their regular salary, such as health insurance, pension plans, and paid time off.