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

question 11

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 $200, how many units of bananas would he consume if he chose the bundle that maximized his utility subject to his budget constraint?

• A) 25
• B) 10
• C) 100
• D) 50
• E) 150

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Definitions:

Control

Refers to the power to influence or direct people's behavior or the course of events.

Interest Income

Income earned from the lending of money or from depositing funds in interest-bearing accounts.

Banks

Financial institutions licensed to receive deposits and provide financial services, including loans, to individuals and businesses.

Economic Benefit

The gain received when money, goods, or services are obtained or when a financial burden is lifted.