Question: Can you please answer this question? I really don't understand it. Assume a consumer has a budget of $30 and is trying to decide how

Can you please answer this question? I really don't understand it.

Assume a consumer has a budget of $30 and is trying to decide how many apples and how many loaves of bread to purchase. You know that the price of an apple is $2.00 and the price of a loaf of bread is $2.00. Use the table below to determine what combination of apples and bread this consumer will purchase

NO.OF APPLES TOTAL UTILITY FROM CONSUMING APPLES LOAVES OF BREAD TOTAL UTILITY FROM CONSUMING BREAD

1 32 1 16

2 60 2 30

3 84 3 42

4 104 4 52

5 120 5 60

6 132 6 66

7 140 7 70

8 144 8 72

9 144 9 72

10 140 10 70

  1. Assume you run into the above consumer and notice that they have put 6 apples and 3 loaves of bread into their cart. Using the conditions of utility maximization, explain how you can tell that this consumer is currently not maximizing their utility.
  2. Assume the consumer comes back and now has 9 apples and 6 loaves of bread. Using the conditions of utility maximization, explain how you can tell that this consumer is not currently maximizing their utility.
  3. Using the concepts of the income effect and substitution effect, explain the difference between a normal good and an inferior good.

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