Question: charlie has a utility function u x2 axb he...
Charlie has a utility function U = x^2 AxB. He has $100 to spend on apples and bananas. Apples cost $1 and bananas cost $2.
(a) What is the equation of his budget constraint? Draw a graph of it. What is it’s slope?
(b) What is his marginal utility of apples?
(c) What is his marginal utility of bananas?
(d) What is a mathematical expression for the slope of his indifference curves?
(e) How many apples and bananas should Charlie buy?