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

question 11

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 $1.75 and the price of bananas fell to $.25, then in order to be able to just afford his old bundle, Charlie would have to have a daily income of

• A)$76.
• B)$18.75.
• C)$56.25.
• D)$37.50.
• E)$150.

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Definitions:

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation and gives holders voting rights and a share in the company's profits via dividends.

Paid-In Capital

Funds that shareholders contribute to a company in exchange for equity, beyond the par value of the shares.

Par Value

The face value of a stock or bond as stated by the issuing company, which does not necessarily reflect its market value.

Common Stock

A type of equity security that represents ownership in a corporation, with holders usually having voting rights and a claim on profits.