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Charlie consumes apples and bananas. His utility function is given by°(±?, ±?) = ±?±?.a) Charlie has 40 apples and 5 bananas. What is Charlie’s utility for the bundle(40, 5)?b) The indifference curve through (40, 5) includes all commodity bundles(±?, ±?)such that°(±?, ±?) = °̅. Give the value of°̅.c) What is the equation of the indifference curve that passes through (40, 5)?d) Graph the indifference curve showing all of the bundles that Charlie likesexactly as well as the bundle (40, 5).e) Donna offers to give Charlie 15 bananas if he will give her 25 apples. WouldCharlie have a bundle that he likes better than (40, 5) if he makes this trade?f) What is the largest number of apples that Donna could demand from Charliein return for 15 bananas if she expects him to be willing to trade or at least beindifferent about trading? (Hint: If Donna gives Charlie 15 bananas, he willhave a total of 20 bananas. If he has 20 bananas, how many apples does heneed in order to be as well-off as he would be without trade?)
 
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The post Charlie consumes apples and bananas. His utility function is given by°(±?, ±?) = ±?±?.a) Charlie has 40 apples and 5 bananas. What is Charlie’s utility for the bundle(40, 5)?b) The indifference curve through (40, 5) includes all commodity bundles(±?, ±?)such that°(±?, ±?) = °̅. appeared first on Superb Professors.

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