460 PART VII
tOpICS
FOr FUrther StUDY
12. Economist George Stigler once wrote that, according
to consumer theory, “if consumers do not buy less of a
commodity when their incomes rise, they will surely
buy less when the price of the commodity rises.” Ex-
plain this statement using the concepts of income and
substitution effects.
13. Five consumers have the following marginal utility of
apples and pears:
Marginal Utility
of Apples
Marginal Utility
of Pears
Claire
6
12
Phil
6
6
Haley
6
3
alex
3
6
Luke
3
12
The price of an apple is $1, and the price of a pear is $2.
Which, if any, of these consumers are optimizing over their
choice of fruit? For those who are not, how should they
change their spending?
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