Question 10.
0 pt
Fida is the only resident in Utopia and is interested to consume apple and orange. Interestingly enough in Utopia it is known how to measure the benefit or happiness from consumption and are measured for apple and orange quantities, respectively, as follows (assume that apple and oranges can be consumed in any fraction; assume that utility is additive):
$U_{apple} = 2 + 3 \times Q_{apple}$
Econ 101
3 of 4
Discussion set two
Term I, 2022
$U_{orange} = 1 + 5 \times Q_{orange}$
Now consider the following PPF and choose the best option from below.
Quantity of oranges
A(1.5,2.8)
B(2.8,1.5)
Quantity of apples
A. Allocative efficiency is reached at point A.
B. Allocative efficiency is reached at point B.
C. Point A might be allocatively efficient.
D. Point B might be allocatively efficient.
E. None of the above.