if Charlie's utility function were X 5 A X B , if apples cost 50 cents each, and if bananas cost 10 cents each, Charlie's budget line would be tangent to one of his indifference curves wheneverA) 5X B = 5X A .B) X B = 5X A .C) X B = X A .D) X A = 5X B .E) 50X A + 10X B = M.

Question

if Charlie's utility function were X  5 A  X B , if apples cost 50 cents each, and if bananas cost 10 cents each, Charlie's budget line would be tangent to one of his indifference curves wheneverA) 5X B  = 5X A .B) X B  = 5X A .C) X B  = X A .D) X A  = 5X B .E) 50X A  + 10X B  = M.

Alexxandria Burnette · Accepted Answer

Final Answer : A, Explanation :  The budget line is tangent to an indifference curve when the marginal rate of substitution (MRS) is equal to the price ratio. The MRS is the slope of the indifference curve, and the price ratio is the ratio of the prices of the two goods. In this case, the MRS is X A 4 /X B , and the price ratio is 50/10 = 5. So, the budget line will be tangent to an indifference curve whenever X A 4 /X B  = 5, which is equivalent to X B  = 5X A .

if Charlie's utility function were X ⁵_AX_B, if apples cost 50 cents each, and if bananas cost 10 cents each, Charlie's budget line would be tangent to one of his indifference curves whenever

A) 5X_B = 5X_A.
B) X_B = 5X_A.
C) X_B = X_A.
D) X_A = 5X_B.
E) 50X_A + 10X_B = M.

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Learning Objectives

Related questions

if Charlie's utility function were X 5A XB, if apples cost 50 cents each, and if bananas cost 10 cents each, Charlie's budget line would be tangent to one of his indifference curves wheneverA) 5XB = 5XA.B) XB = 5XA.C) XB = XA.D) XA = 5XB.E) 50XA + 10XB = M.

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Learning Objectives

Learning Objectives

Related questions

if Charlie's utility function were X ⁵_AX_B, if apples cost 50 cents each, and if bananas cost 10 cents each, Charlie's budget line would be tangent to one of his indifference curves whenever

A) 5X_B = 5X_A.
B) X_B = 5X_A.
C) X_B = X_A.
D) X_A = 5X_B.
E) 50X_A + 10X_B = M.