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

question 16

Multiple Choice

In Problem 1, Charlie has the utility function U(x_A, x_B) = x_Ax_B. His indifference curve passing through 40 apples and 9 bananas will also pass through the point where he consumes 5 apples and

• A) 48 bananas.
• B) 77 bananas.
• C) 80 bananas.
• D) 24 bananas.
• E) 72 bananas.

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Definitions:

NPV Profile

A graphical representation depicting the relationship between the Net Present Value (NPV) and various discount rates.

Slopes Downward

In economics, describes a line on a graph that decreases in value as it moves from left to right, indicating a negative relationship between two variables.

IRR

Internal Rate of Return; a financial metric used to estimate the profitability of potential investments by calculating the discount rate that makes the net present value of cash flows zero.

Mutually Exclusive

Situations or events that cannot occur at the same time.