2. Economics
3. charlie has a utility function u x2 axb he...

Question: charlie has a utility function u x2 axb he...

Question details

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?