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

question 25

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 $5 and the price of bananas stayed constant, the substitution effect on Charlie's apple consumption would reduce his consumption by

• A)8 apples.
• B)13 apples.
• C)16 apples.
• D)4 apples.
• E)None of the above.

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Definitions:

Sum of Squares

A statistical measure that quantifies the variation within a dataset, calculated by summing the squares of each deviation from the mean.

Accuracy

The degree to which the result of a measurement, calculation, or specification conforms to the correct value or a standard.

Forecast Accuracy

The degree to which a forecast predicts actual outcomes.

Sum of Squares

A statistical technique used to measure the variation or dispersion of a set of values, by quantifying the summation of the squared differences between each value and the mean of the set.