Jose notices that each additional banana he eats provides less satisfaction than the
previous one. Therefore, to maximize his satisfaction, he should limit himself to eating
no more than one banana at a time.
True/False?

Question

UpStudy AI · Accepted Answer

Jose's observation indicates that the marginal utility (additional satisfaction) from each extra banana is decreasing. If we denote the marginal utility of the $$n$$th banana by $$MU_n$$, we have

$$
MU_1 > MU_2 > MU_3 > \cdots
$$

However, even though $$MU_n$$ is decreasing, as long as $$MU_n > 0$$, each additional banana still increases his overall satisfaction.

To maximize total utility, Jose should consider the sum of the utility of all bananas consumed:

$$
U = \sum_{n=1}^{N} MU_n
$$

The fact that $$MU_n$$ decreases does not mean that $$U$$ is maximized by stopping at $$N = 1$$. Even if the second banana provides less satisfaction than the first, if $$MU_2$$ is positive, the total satisfaction $$U$$ increases when eating two bananas. It is only optimal to stop adding bananas when the marginal utility becomes zero (or is outweighed by a cost).

Hence, the statement that he should limit himself to eating no more than one banana at a time to maximize satisfaction is **False**.
The statement is **False**. Jose should eat more than one banana to maximize his total satisfaction, as each banana still provides some additional satisfaction even if it's less than the previous one.

Jose notices that each additional banana he eats provides less satisfaction than the
previous one. Therefore, to maximize his satisfaction, he should limit himself to eating
no more than one banana at a time.
True/False?

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Jose notices that each additional banana he eats provides less satisfaction than the previous one. Therefore, to maximize his satisfaction, he should limit himself to eating no more than one banana at a time. True/False?

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Jose notices that each additional banana he eats provides less satisfaction than the
previous one. Therefore, to maximize his satisfaction, he should limit himself to eating
no more than one banana at a time.
True/False?