Question

4. Suppose a consumer's utility from consuming bananas is described by the function: U(B) = 10B + 3B2 B3 Answer the following questions about this consumer's banana consumption: (a) Write down a mathematical relationship to describe the value to this consumer from eating an additional banana? (b) Make a table showing total and marginal utility for banana consumption from 0 to 9 bananas. (C) Would this individual ever choose to consume more than 7 bananas? Explain. 5. For each of our 3 assumptions about Preferences, come up with an example that violates the assumption 6. Write down the standard 2-good budget constraint. Explain the intuition behind the slope parameter

Answer 1

Q4)

A) MU = value due to additional banana

= dU/dB

= 10 + 6B - B^{​​​​​​2}​​​

B) table

Banana B	TU	MU
0	0	-
1	12.667	12.667
2	29.33	18
3	48	19
4	66.67	18
5	83.33	15
6	96	10
7	102.667	3
8	101.33	-6
9	90	-17

C) no, more than 7 bananas are not Consumed .

Bcoz if B > 7 , then MU becomes negative,

its mandatory to answer only first question