Charlie's Utility Function Is X_Ax_B

question 30

Multiple Choice

Charlie's utility function is x_Ax_B.The price of apples used to be $1 per unit and the price of bananas was $2 per unit.His income was $40 per day.If the price of apples increased to $2.25 and the price of bananas fell to $1.25, then in order to be able to just afford his old bundle, Charlie would have to have a daily income of

• A)$57.50.
• B)$116.
• C)$28.75.
• D)$86.25.
• E)$230.

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