Question

Under autarky a country produces three goods: oranges, books, and calculators. The price of oranges is $1. If the wage is equal to $6 and each worker spends 1/3 of her income on each of the three goods, what is the consumption of oranges per person?

Answer 1

Answer:

The consumption of oranges per person is two.

Explanation:

Given data:

Price of oranges = 1$

Wage of worker = 6$

Consumption of oranges per person = ?

Solution:

As given each worker spends 1/3 of income on each of three goods that means

1/3 of income will be spend on oranges

1/3 of income = 1/3 x 6

1/3 of income = 2$

That means 2$ will be spent on oranges

As one orange has price of 1$ so with 2$, we can buy two oranges.