Charlie’s utility function is ????(x????,x????) = x????x????. The price of apples used to be $1, the price of bananas used to be
$2, and his income used to be $40. If the price of apples increased to $5 and the price of bananas stayed constant, the substitution effect on Charlie’s apple consumption would reduce his consumption by (choose the closest answer) (a) 4 apples (b) 13 apples
1 answer:
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