Question

Remember Charlie from Chapter 3? Charlie consumes apples and bananas. We had a look at two of his indifference curves. In this problem we give you enough information so you can find all of Charlie's indifference curves. We do this by telling you that Charlie's utility function happens to be U(xA, xB) = xAxB. (a) Charlie has 40 apples and 5 bananas. His utility for the bundle is U(40,5) = ? The indifference curve through (40,5) includes all bundles (xA, xB) such that xAxB = ? So the indifference curve through (40,5) has the equation xB = ? (a) Donna offers to give Charlie 15 bananas if he will give her 25 apples. Would Charlie have a bundle that he likes better than (40,5) if he makes this trade? What is the largest number of apples that Donna could demand from Charlie in return for 15 bananas if she expects him to be willing to trade or at least indifferent about trading?

          Remember Charlie from Chapter 3? Charlie consumes apples and bananas. We had a look at
two of his indifference curves. In this problem we give you enough information so you can
find all of Charlie's indifference curves. We do this by telling you that Charlie's utility function
happens to be U(xA, xB) = xAxB.

(a) Charlie has 40 apples and 5 bananas. His utility for the bundle is U(40,5) = ? The
indifference curve through (40,5) includes all bundles (xA, xB) such that xAxB = ? So the
indifference curve through (40,5) has the equation xB = ?

(a) Donna offers to give Charlie 15 bananas if he will give her 25 apples. Would Charlie have
a bundle that he likes better than (40,5) if he makes this trade? What is the largest
number of apples that Donna could demand from Charlie in return for 15 bananas if she
expects him to be willing to trade or at least indifferent about trading?

Remember Charlie from Chapter 3? Charlie consumes apples and bananas. We had a look at
two of his indifference curves. In this problem we give you enough information so you can
find all of Charlie's indifference curves. We do this by telling you that Charlie's utility function
happens to be U(xA, xB) = xAxB.

(a) Charlie has 40 apples and 5 bananas. His utility for the bundle is U(40,5) = ? The
indifference curve through (40,5) includes all bundles (xA, xB) such that xAxB = ? So the
indifference curve through (40,5) has the equation xB = ?

(a) Donna offers to give Charlie 15 bananas if he will give her 25 apples. Would Charlie have
a bundle that he likes better than (40,5) if he makes this trade? What is the largest
number of apples that Donna could demand from Charlie in return for 15 bananas if she
expects him to be willing to trade or at least indifferent about trading?

Added by Megan L.

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