A consumer has 10 dollars to spend on apples and bananas. The consumer’s preferences can be represented with the utility function u(a, b) = a · b, where a is the quantity of apples and b is the quantity of bananas. Show your work.

If apples cost 1 dollar each, and bananas cost 0.5 dollars each, how many of each fruit should the consumer buy to make themselves as satisfied as possible with their purchase? Explain why.

Answer rating: 100% (QA)

To find the optimal quantities of apples and bananas that would maximize the consumers utility we need to consider the consumers budget constraint and ... View the full answer