In Problem 1, Charlie Has the Utility Function U(x_A, X_B)

question 8

Multiple Choice

In Problem 1, Charlie has the utility function U(x_A, x_B) = x_Ax_B. His indifference curve passing through 6 apples and 16 bananas will also pass through the point where he consumes 2 apples and

• A) 12 bananas.
• B) 24 bananas.
• C) 50 bananas.
• D) 54 bananas.
• E) 48 bananas.

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Definitions:

Consumer Surplus

The difference between what consumers are willing to pay for a good or service versus what they actually pay, representing a measure of consumer benefit.

Tariff

A tax imposed by a government on goods and services imported from other countries, used to control trade.

Restrictions

Rules or limitations placed on activities, movements, or trade to control or regulate actions.

World Price

The international market price at which goods are traded between countries; it plays a crucial role in determining local prices and trade policies.