4. Suppose a person has $8 to spend only on apples and bananas. Apples

1

cost $0.4 each, and bananas cost $0.1 each. Furthermore, his preferences for

apples (A) and bananas (B) can be represented by U = √AB.

a) If A = 5 and B = 80, what will utility be?

b) If A = 10, what value of for B will provide the same utility in part a?

c) If A = 20, what value of for B will provide the same utility in parts

a and b?

d) Graph the indifference curve implied by parts a through c.

e) Give the budget constraint, which of the points identified in parts a

through e can be bought by this person?