Question

Martha loves to eat chili, especially an award-winning chili recipe that calls for using 2 tablespoons of chili powder for every 1 pound of ground buffalo. Which of the following utility functions could represent Martha's preferences, where U is a function of tablespoons of chili powder (P) and pounds of ground buffalo (B)?
(A) U=min{2B, P}
(B) U=min{1/2B, P}
(C) U= 2P+B
(D) U=2PB

Answer 1

Answer:

Correct Option is (A) U=min{2B,P}

Explanation:

The solution and complete explanation for the above question and mentioned conditions is given below in the attached document.i hope my explanation will help you in understanding this particular question.

Answer 2

Answer:

(A) U=min{2B, P}

Explanation:

This is an example of Leontief utility function whereby commodities must be consumed in fixed proportion. If the fixed quantity of one commodity is increased without increasing the quantity of another commodity, the consumer utility will not change.

From the question, the correct utility function is U=min{2B, P}. It implies that if we an extra fixed quantity of chili powder which is 2 tablespoons without an extra fixed quantity of ground buffalo which is 1 pound, Martha will not obtain an extra an award-winning chili. As a result result, Martha's utility will not change, that is, it her utility will remain the same.

The only way her utility will increase is when we have an extra fixed quantity of chili powder which is 2 tablespoons together with an extra fixed quantity of ground buffalo which is 1 pound.

Therefore, U=min{2B, P} utility functions is the one that could represent Martha's preferences.