Multiple Choice
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 $1.50 and the price of bananas fell to $1.75, then in order to be able to just afford his old bundle, Charlie would have to have a daily income of
A) $23.75.
B) $47.50.
C) $96.
D) $71.25.
E) $190.
Correct Answer:
Verified
Correct Answer:
Verified
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