Asked by
Joshua Broida
on Oct 14, 2024Verified
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.
Verified Answer
RS
Learning Objectives
- Undertake the utility maximization framework to find the best mix of consumption goods.
- Study the influence price modifications have on consumer selection processes.