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Joshua Broida
on Oct 14, 2024

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Charlie's utility function is U(xA, xB)  xAxB.If Charlie's income were $40, the price of apples were $4, and the price of bananas were $6, how many apples would there be in the best bundle that Charlie could afford?

A) 8
B) 10
C) 12
D) 9
E) 5

Utility Function

A function that reflects the satisfaction or utility a consumer derives from consuming goods or services.

Budget Constraint

A constraint on the combinations of goods a consumer is able to purchase, determined by their income level and the costs of these items.

Income

The income earned from labor or investments, often received periodically.

  • Undertake the utility maximization framework to find the best mix of consumption goods.
  • Study the influence price modifications have on consumer selection processes.
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Rachel SalmeronOct 20, 2024
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