Mary Granola Consumes Tomatoes and Nectarines

Mary Granola consumes tomatoes and nectarines.Mary's indifference curves are kinky.When she is consuming more tomatoes than nectarines, she is just willing to trade 3 tomatoes for 1 nectarine.When she is consuming more nectarines than tomatoes, she is just willing to trade 4 nectarines for 1 tomato.Let P₁ be the price of nectarines, and P₂ the price of tomatoes.Mary maximizes her utility subject to her budget constraint.(Hint: Sketch one of her indifference curves.)

A) When P₁ >P₂, she must consume only tomatoes.
B) When P₁ >P₂, she must consume 3 times as many tomatoes as nectarines.
C) When P₁ > 3P₂, she must consume only tomatoes.
D) When 4P₁ >P₂, she must consume only nectarines.
E) She must consume equal numbers of both.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free