Question

Fouz consumers only oranges and bananas. Her only source of income is her initial endow- ment of 20 units of oranges and 10 units of bananas. She prefers to consume them in a proportion of 2 units of bananas per 1 unit of orange. Suppose the price of bananas 4$ while the price of oranges of 2$ per unit of each fruit. what will be her consumption bundle?

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Answer to a math question Fouz consumers only oranges and bananas. Her only source of income is her initial endow- ment of 20 units of oranges and 10 units of bananas. She prefers to consume them in a proportion of 2 units of bananas per 1 unit of orange. Suppose the price of bananas 4$ while the price of oranges of 2$ per unit of each fruit. what will be her consumption bundle?

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Hank
4.8
97 Answers
\textbf{Total Revenue Calculation}:
Given:
- Initial endowment of oranges = 20 units
- Initial endowment of bananas = 10 units
- Price of oranges = $2 per unit
- Price of bananas = $4 per unit

To find total revenue:
Revenue from selling oranges = 20 units * $2 per unit = $40
Revenue from selling bananas = 10 units * $4 per unit = $40
Total revenue = $40 (oranges) + $40 (bananas) = $80

Let x be the number of units of oranges Fouz consumes.
According to her consumption preference ratio of 2:1, she consumes 2 units of bananas for every 1 unit of oranges, so bananas consumed = 2x.

\textbf{Cost Equation based on Total Revenue}:
Cost of oranges + Cost of bananas = Total revenue
2x * $2 + 2x * $4 = $80
4x + 8x = 80
12x = 80
x = \frac{80}{12}
x = \frac{20}{3}

\textbf{Answer}:
Fouz will consume \frac{20}{3} units of oranges and \frac{40}{3} units of bananas.

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