Question: 3 think about you benefit from food let c be...
3. Think about you benefit from food. Let c be the market value of the amount of food you have in a given day and u(c) the utility from consuming c.
(a) Plot u(c) (utility on the y axis, consumption on the x axis). Explain why it is the shape it is.
(b) If you have enough money to consume C in a week, how much would you spend each day? Is this consistent with your plot?
(c) You are offered the choice between (A) $150 dollars worth of food for the week (B) 50% chance that you get $600 worth of food for the week and 50% you get $0 worth of food for the week.
If this is the only source of food (e.g. if you are unlucky and get $0 worth of food for the week you literally get no food for the week), then which option do you prefer?