Morris Has the Utility Function U(b, W) = 4b

question 68

Multiple Choice

Morris has the utility function U(b, w) = 4b + 16w and Philip has the utility function U(b, w) = bw, where b is the number of books consumed per month and w is bottles of wine consumed per month. If we draw an Edgeworth box with books on the horizontal axis and wine on the vertical axis and if we measure Morris's consumptions from the lower left corner of the box, then the contract curve contains

• A) a straight line with slopepassing through the lower left corner of the box.
• B) a straight line running from the upper right corner of the box to the lower left.
• C) a straight line with slopepassing through the upper right corner of the box.
• D) a curve that gets steeper as you move from left to right.
• E) a curve that gets flatter as you move from left to right.

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Definitions:

National Debt

The total amount of money that a country's government has borrowed, by various means, to cover its spending in excess of tax revenues.

Federal Budget Deficit

The shortfall when the federal government's expenditures exceed its revenues within a fiscal year.

Federal Budget Deficit

The financial situation where the federal government's expenditures exceed its revenues in a given fiscal year.

National Debt

The total amount of money that a country's government has borrowed by various means.