Charlie's utility function is U(x_A, x_B)=x_Ax_B.If Charlie's income were $40, the price of apples were $2, and the price of bananas were $6, how many apples would there be in the best bundle that Charlie could afford? A)4 B)20 C)5 D)6 E)10

Question

Quizplus · Accepted Answer

Given the utility function is not clearly defined due to the formatting issue, we can still solve the problem using the budget constraint. Charlie's budget is $40. With apples priced at $2 and bananas at $6, the best bundle Charlie can afford depends on maximizing utility within this budget constraint. Without specific utility preferences, we assume Charlie spends the entire budget. The correct answer involves finding a combination of apples and bananas that fits this budget. However, since the question asks specifically for the number of apples, we focus on that. If Charlie were to spend the entire budget on apples, at $2 each, he could afford 20 apples ($40/$2 = 20). This doesn't consider the utility maximization because we can't calculate it from the given information, but it gives the maximum number of apples Charlie could afford, making E the correct choice based on the information provided.

Charlie's Utility Function Is U(xA, XB)=xAxB

Charlie's Utility Function Is U(x_A, X_B)=x_Ax_B