Chapter 4. Figure It Out 4.4

Antonio gets utility from consuming two goods, burgers and fries. His utility function is given by U = √ BF = B^0.5F^0.5 where B is the amount of burgers he eats and F the servings of fries. Antonio’s marginal utility of a burger is MU_B = 0.5B^-0.5F^0.5 , and his marginal utility of an order of fries is MU_F = 0.5B^0.5F^-0.5 Antonio’s income is $20, and the prices of burgers and fries are $5 and $2, respectively.

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Question

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 +jEDcWw2tUQ= servings of fries for each burger he purchases.

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