Ernie's Utility Function Is U(x, Y) = 32xy

question 4

Multiple Choice

Ernie's utility function is U(x, y) = 32xy. He has 10 units of good x and 8 units of good y. Waldo's utility function for the same two goods is U(x, y) = 3x + 5y. Waldo has 9 units of x and 13 units of y.

• A) Waldo prefers Ernie's bundle to his own, but Ernie prefers his own bundle to Waldo's.
• B) Each prefers the other's bundle to his own.
• C) Neither prefers the other's bundle to his own.
• D) Ernie prefers Waldo's bundle to his own bundle, but Waldo prefers his own bundle to Ernie's.
• E) Since they have different preferences, there is not enough information to determine who envies whom.

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Definitions:

Racially Integrated

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Bretton Woods Conference

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Bretton Woods Meeting

An international conference held in 1944 in Bretton Woods, New Hampshire, where the foundations for the modern international monetary system and major global financial institutions were established.