Charlie's utility function is TAB. The price of apples is $1, the price bananas is $2, and his income is $40. The price of apples increases to $8. What Charlie's compensating variation from this price change? (Rounded to two decimal aces.) ) $43.14
Charlie's utility function is TAB. The price of apples is $1, the price bananas is $2, and his income is $40. The price of apples increases to $8. What Charlie's compensating variation from this price change? (Rounded to two decimal aces.) ) $43.14
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:7.
Charlie's utility function is AB. The price of apples is $1, the price
of bananas is $2, and his income is $40. The price of apples increases to $8. What
is Charlie's compensating variation from this price change? (Rounded to two decimal
places.)
(a) $43.14
(b) $53.14
(c) $63.14
(d) $73.14
(e) $83.14
Solution: d
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