Antonio gets utility from consuming two goods, burgers and fries. His utility function is given by U = √ BF = B0.5F0.5 where B is the amount of burgers he eats and F the servings of fries. Antonio’s marginal utility of a burger is MUB = 0.5B-0.5F0.5 , and his marginal utility of an order of fries is MUF = 0.5B0.5F-0.5 Antonio’s income is $20, and the prices of burgers and fries are $5 and $2, respectively.
Which of the following represent’s Antonio’s marginal rate of substitution between burgers and fries, MRSBF?
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| B. |
| C. |
| D. |
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Burgers cost $5, and fries cost $2. If Antonio maximizes his utility, how many fries should he purchase to accompany every burger?
Antonio should buy servings of fries for each burger he purchases.
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If Antonio has $20 to spend, how many burgers and fries should he consume to maximize his utility?
| A. |
| B. |
| C. |
| D. |
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