Question
A Capuchin monkey's preference over cF units of fruit discs and cC units of cereal chunks can be represented by the utility function u (cF
A Capuchin monkey's preference over cF units of fruit discs and cC units of cereal chunks can be represented by the utility function u (cF , cC ) = cF + cC + (cF rF ) + (cC rC ) where rF is his reference point for fruit discs, and rC is his reference point for cereal chunks. The function () is defined as (z) = ( z z 0 3z z < 0 . The reference point is the status quo (that is, the monkey's initial endowment). 1. (10 points) Suppose that the monkey has one fruit disc and no cereal chunks. What is the minimum number of cereal chunks the monkey would require ider to trade away his fruit disc? away his fruit disc?
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