In Problem 1, If Charlie's Utility Function Were X⁵_AX_B, If

question 17

Multiple Choice

In Problem 1, if Charlie's utility function were X⁵_AX_B, if apples cost 50 cents each, and if bananas cost 10 cents each, Charlie's budget line would be tangent to one of his indifference curves whenever

• A) 5X_B = 5X_A.
• B) X_B = 5X_A.
• C) X_B = X_A.
• D) X_A = 5X_B.
• E) 50X_A + 10X_B = M.

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Definitions:

Mental Set

A psychological tendency to approach problems in a certain way due to past experiences and what has worked previously.

Heuristic Reasoning

A method of problem-solving based on practical, experiential approaches and shortcuts rather than systematic logic.

Evolutionary Processes

Natural mechanisms that drive the genetic changes in populations over time, leading to species adaptation and evolution.

Heuristic Fallacies

Errors or biases in judgment or decision-making, arising from the use of mental shortcuts or heuristics.