Charlie's Utility Function Is X_Ax_B

Charlie's utility function is x_Ax_B.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, then in order to be able to just afford his old bundle, Charlie would have to have a daily income of

A) $57.50.
B) $116.
C) $28.75.
D) $86.25.
E) $230.

Correct Answer:

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