To determine the utility-maximizing combination of cheeseburgers and French fries, we need to consider their respective prices and the budget constraint.
Since the price of a cheeseburger is $2 and the price of a bag of French fries is $1, with a budget of $6, we can consider different combinations to maximize utility.
If we let x represent the number of cheeseburgers and y represent the number of bags of French fries, the budget constraint can be expressed as:
2x + 1y = 6
To determine the utility-maximizing combination, we need to consider the marginal utility of each item. Assuming both cheeseburgers and French fries provide positive utility and the marginal utility is diminishing, we can construct an indifferent curve to analyze the optimal combination.
Let's assume the marginal utility (MU) of cheeseburgers is decreasing at a faster rate than the MU of French fries, meaning that the MU of fries diminishes less rapidly compared to cheeseburgers.
Suppose the MU of cheeseburgers is greater than the MU of French fries (MUc > MUs). Based on the concept of diminishing marginal utility, purchasing more French fries relative to cheeseburgers would lead to a higher overall utility.
For instance, if the MU of cheeseburgers declines more rapidly, it may be more beneficial to allocate more resources to French fries. Therefore, we could consider allocating more spending towards French fries compared to the cheeseburgers.
Let's consider some combinations:
Combination 1: 3 cheeseburgers and 0 fries
Total cost: 2 * 3 + 1 * 0 = 6
Combination 2: 2 cheeseburgers and 2 fries
Total cost: 2 * 2 + 1 * 2 = 6
Combination 3: 1 cheeseburger and 4 fries
Total cost: 2 * 1 + 1 * 4 = 6
Combination 4: 0 cheeseburgers and 6 fries
Total cost: 2 * 0 + 1 * 6 = 6
If each combination provides positive utility, it's essential to determine the exact utilities associated with each item and combination to determine the utility-maximizing choice.
Keep in mind that utility is subjective and varies among individuals, so the specific utility-maximizing combination may differ depending on personal preferences.
If the price of a cheeseburger is $2, the price of a bag of french fries is $1, and you have $6 to spend (and you spend all of it), what is the utility-maximizing combination of cheeseburgers---and french fries---?
1 answer