Tim Consumes Only Apples and Bananas

question 11

Multiple Choice

Tim consumes only apples and bananas.He prefers more apples to fewer, but he gets tired of bananas.If he consumes fewer than 29 bananas per week, he thinks that 1 banana is a perfect substitute for 1 apple.But you would have to pay him 1 apple for each banana beyond 29 that he consumes.The indifference curve that passes through the consumption bundle with 30 apples and 39 bananas also passes through the bundle with A apples and 21 bananas, where A equals

• A)25.
• B)28.
• C)34.
• D)36.
• E)None of the above.

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Definitions:

Marginal Cost

The augmentation in total cost triggered by the creation of one further unit of a product or service.

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers, leading to a state of market equilibrium.

Equilibrium Price

The cost at which the amount of a product that buyers want to purchase matches the amount that sellers are willing to supply, creating equilibrium in the market.

Marginal Cost

Marginal cost is the increase in total cost that arises from producing one additional unit of a product or service.