Question

Charlie has the utility function u(xa, xb) =xaxb.his indifference curve passing through 32 applesand 8 bananas will also pass through the point where he consumes 4 apples and

Answer 1

On an indifference curve, all bundles give the same amount of utility. (32,8) gives a utility of U(32,8)=32x8=256 If (4,y) is on the same indifference curve, then it must give the same utility. Hence, 256 = 4y y=64 64 bananas