Charlie's utility function is U(x_A, x_B)=x_Ax_B.If Charlie's income were $40, the price of apples were $5, and the price of bananas were $8, how many apples would there be in the best bundle that Charlie could afford? A)8 B)11 C)10 D)15 E)4

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. If the price of apples is $5, to find the maximum number of apples Charlie can afford, we divide the total budget by the price of apples: $40 / $5 = 8 apples. However, since none of the options match this calculation and considering the prices of apples and bananas, the best bundle that maximizes utility under the given budget constraint would likely involve purchasing fewer apples to allow for the purchase of at least one banana, given their higher price. Without the specific utility function details, we aim for a reasonable number of apples that could be part of an optimal bundle, considering the need to allocate some budget to bananas as well. The correct choice, based on the provided options and the need to correct for the initial calculation mistake, is 4 apples, as it allows for the allocation of budget towards both apples and bananas, potentially maximizing utility.

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

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