Question

David consumes Freebirds burritos (b) and Costco chicken (c). His utility function is given by U(b,c)= c+b. Currently he has 0 burritos and 16 chickens. How many chickens will he give up for three burritos?

Answer 1

David would give up 4 chickens for three burritos.

Step-by-step explanation:

David's utility function U(b,c) = c + b represents the total satisfaction he gets from consuming burritos (b) and chickens (c). To determine how many chickens David will give up for three burritos, we need to find the point at which his utility is maximized. Currently, David has 0 burritos and 16 chickens, which gives him a utility of U(0, 16) = 16.

If he gives up 4 chickens, his utility would be U(0, 12) = 12. On the other hand, if he consumes 3 burritos and 12 chickens, his utility would be U(3, 12) = 15. Since the utility is higher with 3 burritos and 12 chickens, David would give up 4 chickens for three burritos.