New NABARD Grade A 2024 Results out!! Register here for a free live workshop on Feb 26, 2025 at 5 PM. Only on Zoom.

    Question

    Suppose after paying bills and setting aside some money

    for retirement, Joana has $130 left to spend on just two goods: concerts and books. For simplicity, we’ll assume concert tickets cost $55 and books cost $10. Which of the following combination of goods could be her utility-maximizing bundle?
    A 3 concert tickets and 2 books Correct Answer Incorrect Answer
    B 2 concert tickets and 2 books Correct Answer Incorrect Answer
    C 1 concert tickets and 5 books Correct Answer Incorrect Answer
    D 1 concert tickets and 10 books Correct Answer Incorrect Answer

    Solution

    To maximise the utility Joana must buy 2 concert ticket and 2 books. (2*55 + 2* 10 = 130). Option 1 and 5 is unattainable for Joana and other options are not as efficient as option B is.

    Practice Next