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

question 7

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 $160, 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) 8
• D) 20
• E) 120

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