Question
Anna has $32 daily budget to spend on food. She cannot save this money and has to spend all of it every day. She needs
Anna has $32 daily budget to spend on food. She cannot save this money and has to spend all of it every day. She needs to allocate her money between bananas and sushi pieces, and she can only buy whole pieces (e.g. she cannot buy half of a banana). Prices of bananas and sushi change from day to day. Below you can see Anna's choices on two different days.
Day 1: Banana costs $2, sushi costs $4. Anna purchases 4 bananas and 6 sushi.
Day 2: Banana costs $4, sushi costs $2. Anna purchases 6 bananas and 4 sushi.
a)Do you think Anna maximizes a utility function? Explain your answer. (hint: draw a graph to help you motivate your answer)
b)If Anna is (not) maximizing utility, how could you change her choices to make her (consistent) inconsistent with utility maximization?
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