Charlie Consumes Apples and Bananas $\mathbf{U}\left(X_{A}, X_{B}\right)=x_{A} x^{2} B$

question 15

Multiple Choice

Charlie consumes apples and bananas. His utility function is $\mathbf{U}\left(X_{A}, X_{B}\right) =x_{A} x^{2} B$
-refer to scenario above, Charlie's utility function is x_Ax_B.The price of apples used to be $1 per unit, and the price of bananas $2 per unit.His income was $40 per day.If the price of apples increased to $2.25 and the price of bananas fell to $1.75, then in order to be able to just afford his old bundle, Charlie would have to have a daily income of

• A)$62.50.
• B)$126.
• C)$31.25.
• D)$93.75.
• E)$250.

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Definitions:

Net Operating Income

The total income from operations of a company before taxes and interest, calculated by subtracting operating expenses from gross profit.

Sales Volume

Refers to the quantity of products or services sold by a business within a specific period.

Break-even Point

The level of production or sales at which total revenues equal total costs, resulting in no profit or loss.

Dollar Sales

The total revenue a company generates expressed in monetary terms, without taking into account the cost of goods sold.