In Problem 1, If Charlie's Utility Function Were X⁶_AX_B, If

question 14

Multiple Choice

In Problem 1, if Charlie's utility function were X⁶_AX_B, if apples cost 90 cents each, and if bananas cost 10 cents each, Charlie's budget line would be tangent to one of his indifference curves whenever

• A) X_A = 6X_B.
• B) X_B = 6X_A.
• C) X_B = X_A.
• D) 6X_B = 9X_A.
• E) 90X_A + 10X_B = M.

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Definitions:

Pension Payments

Regular payments made to retirees or their beneficiaries from a pension fund.

Actuarial Assumed Rate

The interest rate that an actuary determines to calculate the present value of future pension benefits or contributions.

Risk Averse

A description of an investor's preference for lower risk investments, often characterized by a willingness to accept lower returns in exchange for reduced risk.

Empirical Evidence

Information derived from observation or experimentation that serves as the basis for knowledge or theory.