Question 5 Pedro's utility function is U(a, b) =a+10b-b², where a is the amount of apples consumed and b is the amount of bananas consumed. He has $100 income. The price of apple is $0.5 per lb. Price of banana's though increases with its purchase. Specifically, buying, b pounds of bananas will cost Pedro b². a. What is Pedro's optimal consumption? b. Now, he suddenly acquires an extra $100 income. How this will change his allocation?

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