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

question 21

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 $7 and the price of bananas stayed constant, the substitution effect on Charlie's apple consumption would reduce his consumption by

• A)6 apples.
• B)13.57 apples.
• C)8.57 apples.
• D)17.14 apples.
• E)None of the above.

---

Definitions:

Good Purchase

A transaction or acquisition that is considered valuable or beneficial, often because of its quality, price, or utility.

News Releases

Official statements issued to the media to announce something of interest, aiming to generate positive coverage or inform the public.

Public Relations Department

A division within an organization responsible for managing its image and communication with the public and media.

Annual Company Picnic

A social event held by a company for its employees and often their families, typically outdoors and once a year, to foster community and morale.