Charlie has the utility function U(x_A, x_B)= x_Ax_B.His indifference curve passing through 32 apples and 8 bananas will also pass through the point where he consumes 4 apples and A)16 bananas. B)32 bananas. C)68 bananas. D)72 bananas. E)64 bananas.

Question

Quizplus · Accepted Answer

Charlie's utility function is U(x_A, x_B) = x_A * x_B. At the point (32 apples, 8 bananas), his utility is 32 * 8 = 256. For the indifference curve to pass through (4 apples, x bananas), the utility must remain 256. Solving 4 * x = 256 gives x = 64 bananas.

Charlie Has the Utility Function U(xA, XB)= XAxB

Charlie Has the Utility Function U(x_A, X_B)= X_Ax_B