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Charlie Consumes Apples and Bananas U(XA,XB)=xAx2B \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 U(XA,XB) =xAx2B \mathbf{U}\left(X_{A}, X_{B}\right) =x_{A} x^{2} B
-refer to scenario above, Charlie's utility function is xAxB.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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