Charlie's utility function is U(A, B)= AB, where A and B are the numbers of apples and bananas, respectively, that he consumes.If Charlie is consuming 30 apples and 120 bananas, then if we put apples on the horizontal axis and bananas on the vertical axis, the slope of his indifference curve at his current consumption is
A)-31.
B)-8.
C)-1/4.
D)-4.
E)-1/8.

Question

Quizplus · Accepted Answer

The slope of the indifference curve is given by the marginal rate of substitution (MRS), which is the ratio of the marginal utilities. For U(A, B) = AB, the marginal utility of A is B and the marginal utility of B is A. Thus, MRS = MU_A / MU_B = B / A = 120 / 30 = 4.

Charlie's Utility Function Is U(A, B)= AB, Where a and B