Asked by Madeline Lombardo on Jun 03, 2024

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Charlie's utility function is U(A, B)  AB, where A and B are the numbers of apples and bananas, respectively, that he consumes.If Charlie is consuming 15 apples and 30 bananas, then if we put apples on the horizontal axis and bananas on the vertical axis, the slope of his indifference curve at his current consumption is

A) 16.
B) 2.
C) 4.
D) 1/2.
E) 1/4.

Utility Function

A mathematical representation that defines how much utility or satisfaction a consumer derives from consuming goods and services.

Indifference Curve

A graph representing different combinations of two goods that provide the same level of utility or satisfaction to the consumer.

Apples

A common fruit that comes in many varieties and is used in numerous culinary preparations, also often referenced as a basic economic good in examples.

  • Delve into indifference curves and the variation in their slopes observed at specific points of consumption.
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YO
Yasser OwidahJun 09, 2024
Final Answer :
B
Explanation :
The slope of an indifference curve is given by the marginal rate of substitution (MRS), which in this case is the negative of the ratio of the marginal utilities of A and B. Given Charlie's utility function U(A, B) = AB, the marginal utility of A (MU_A) is B, and the marginal utility of B (MU_B) is A. Therefore, MRS = -MU_A/MU_B = -B/A. Plugging in A = 15 and B = 30, we get MRS = -30/15 = -2.