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

question 23

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, the price of bananas used to be $2, and his income used to be $40.If the price of apples increased to $6 and the price of bananas stayed constant, the substitution effect on Charlie's apple consumption would reduce his consumption by

• A)8.33 apples.
• B)13.33 apples.
• C)5 apples.
• D)16.67 apples.
• E)None of the above.

---

Definitions:

Balance Sheet

A financial statement that provides a snapshot of a company's assets, liabilities, and shareholders' equity at a specific point in time.

Neighborhoods

Geographic areas within a city or town, characterized by distinct attributes and often by a sense of community among residents.

Comprised

Made up of; consists of various components or elements.

Marketing Concept

A business philosophy suggesting that success is achieved by focusing on the needs and wants of target markets and delivering value better than competitors.