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

question 23

Multiple Choice

In Problem 1, Charlie has a utility function U(x_A, x_B) = x_Ax_B, the price of apples is $1, and the price of bananas is $2. If Charlie's income were $320, how many units of bananas would he consume if he chose the bundle that maximized his utility subject to his budget constraint?

• A) 80
• B) 40
• C) 160
• D) 16
• E) 240

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Definitions:

Independent Variable

A variable in an experiment that is manipulated to observe its effects on a dependent variable.

Internal Validity

The extent to which a study provides evidence that a causal relationship exists between the variables it examines, free from confounding factors.

Random Assignment

Use of a random "chance" procedure (such as a random number generator or coin toss) to determine the condition in which an individual will participate.

Confounding Variable

A factor other than the independent variable that might produce an effect in an experiment, leading to inaccurate results if not controlled.