You offer Donny the choice between two bundles of Coffee (C) and Muffins (M). The options...

You offer Donny the choice between two bundles of Coffee (C) and Muffins (M). The

options are(C,M) = (6, 4)and(C,M) = (8, 2), and Donny indicates he prefers the second option.

(a) Write a utility function for Donny that is consistent with his choice.

Suppose you offer him a third option of(C,M) = (7, 6)in addition to the original two, and that Donny indicates he prefers this third option to the first two.

(b) Write a utility function for Donny that is consistent with his choice. It is possible it may be

the same as your answer from part (a).

Expert Solution

The consumer follows the axiom 'more is better' always while choosing his preferred bundle for consumption

Rahul Sunny answered 2 months ago

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