Quiz 01

ECON 101H: Introduction to Economics

Sérgio O. Parreiras

Economics Department, UNC at Chapel Hill

Spring 2026

Quiz 01

Question 03

Question 03

Bob's marginal utilities for apples is $MU^{Bob}_a = 19$ and for bananas is $MU^{Bob}_b = 3$. Carlo's marginal utilities for apples is $MU^{Carlos}_a = 3$ and for bananas is $MU^{Carlos}_b = 11$. Assume Carlos sells one apple to Bob and Bob pays Carlos with $x$ bananas. As long as $x$ is in the range: min $x = 3$ $< x <$ max $x = 3.67$, the utility of both will increase after this trade.

$\Delta U^{Carlos} = -1 \times MU^{Carlos}_a + x \times MU^{Carlos}_b = -3 + x \times 11$

$\Delta U^{Carlos} > 0 \Leftrightarrow x > 3/11 = 0.272727$

$\Delta U^{Bob} = 1 \times MU^{Bob}_a - x \times MU^{Bob}_b = 19 - x \times 3$

$\Delta U^{Bob} > 0 \Leftrightarrow 19 > 3x \Rightarrow x < 19/3 = 6.33333$