Can't use Lagrange on this. Multiple Choice Practice- Show work or provide short explanation 4. Charlie's utility function for apples (A) and bananas (B) is U(AB)-AB. The price of apples used...
Charlie's utility function is xAxB. The price of apples used to be $1 per unit and the price of bananas was $2 per unit. His income was $40 per day. If the price of apples increased to $2.25 and the price of bananas fell to $1.25, a. compute the optimal consumption bundle for both goods before the price change; b. Compute the daily income after the price change in order to be able to just afford his old bundle.
Charlie consumes apples and bananas. His utility function is: U(xA; xB) xAxB. The price of apples is $1, the price of bananas is $2, and Charlie's income is $40 a day. The price of bananas suddenly falls to $1. Find the substitution and income effect of the price change for apples and bananas.
4. Charlie likes both apples and bananas. He consumes nothing else. Charlie consumes x bushels of apples per year and x bushels of bananas per year. Suppose that Charlie's preference is represented in the following utility function: u(x,,Xy)-x,Xy . Suppose that the price of apples is S1, the price of bananas is S2, and Charlie's income is $40. (14 points) a. Draw Charlie's budget line. Plot a few points on the indifference curve that gives Charlie a utility of 150...
1. Charlotte loves apples and hates bananas. Her utility function is U (a,b) a-b2/4, where a is the number of apples she consumes and b is the num- ber of bananas she consumes. Assume that Charlotte's income is y • What are the demand functions for Charlotte ? • What are the Engel curves for Charlotte? 2. Wilbur likes both apples and bananas. His utility function is U(a,b) = ab1/2. Assume Wilbur's budget is m, the price of apple is...