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

question 20

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 $4 and the price of bananas stayed constant, the substitution effect on Charlie's apple consumption would reduce his consumption by

• A)15 apples.
• B)3 apples.
• C)7.50 apples.
• D)12.50 apples.
• E)None of the above.

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Definitions:

Fight-or-Flight Response

An acute stress response involving physiological changes that prepare the body to either confront or flee from a threat.

Uterus

A major female reproductive organ where the development of the embryo and fetus occurs during pregnancy.

Ovary

The female reproductive organ in flowers and certain animals, including humans, where eggs or ovules are produced.

Embryo

(1) A young organism before it emerges from the egg, seed, or body of its mother. (2) Developing human until the end of the second month, after which it is referred to as a fetus. (3) In plants, the young sporophyte produced following fertilization and subsequent development of the zygote.