Question

4) Consider Brian, who went to the baseball game last night. He gets utility from consuming hotdogs (H) and beer (B). His utility function is: U(HB) - H B A. Based on Brian's utility function shown above show that he has diminishing marginal returns for beer. Be sure to explain your answer. (hint: when you see marginal you should often think of a derivative] B. Suppose Brian only has $80 to spend and the price of beer (Pe) is $8, while the price of hotdogs are (PH) $4. What is the optimal number of beer and hotdogs that Brian should be consuming? Be sure to show your work!

Consider Brian, who went to the baseball game last night. He gets utility from consuming hotdogs (H) and beer (B). His utility function is: U(H,B) = H^0.5 B^0.5
A. Based on Brian's utility function shown above show that he gas diminishing marginal returns for beer. Be sure to explain your answer.

Answer 1

DA A) Page No U SHB MRS- aulam dolaB VB 25B 250 VA - VB VB rusn MUB 2012B B . и 2B - VS I return so we see marginal utility of beer i proportional to been. Menu is been increases its marginal is diminishing decreasing m= 80 PB = 8 Pr : 4 eqm: MRS Patter Pr I Po B = 4 1 H 2 28M = m PB x B & Pn xH PB + 4H : 80 BB + 8 B = go - B : 5 H: 10