Chapter 4. Figure It Out

4.1 Screen 1 of 3

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Figure It Out: Antiono gets utility from consuming two goods, burgers and fries. His utility function is given by where B is the amount of burgers he eats and F the servings of fries.

Antonio’s marginal utility of a burger is , and his marginal utility of an order of fries is . Antonio’s income is $20, and the prices of burgers and fries are $5 and $2, respectively.

Question

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4.2 Screen 2 of 3

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.

When Antonio maximizes utility, his MRSBF = PB/PF. Antonio’s MRSBF = F/B; PB/PF = 5/2. So, F/B = 2.5, or F = 2.5×B. Antonio should purchases 2.5 orders of fries for each burger he buys. For further review see section “Indifference Curves”

4.3 Screen 3 of 3

Question

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