Suppose That Paul and David Have Utility Functions U =

question 25

Multiple Choice

Suppose that Paul and David have utility functions U = 4A P + O P and U = A D + 3O D, respectively, where A P and O P are Paul's consumptions of apples and oranges and A D and O D are David's consumptions of apples and oranges. The total supply of apples and oranges to be divided between them is 18 apples and 18 oranges. The fair allocations consist of all allocations satisfying the following conditions.

• A) A_D = A_P and O_D = O_P.
• B) 8A_P + 2O_P is at least 90 and 2A_D + 6O_D is at least 72.
• C) 4A_P + O_P is at least 90 and 2A_D + 3O_D is at least 72.
• D) A_D + O_D is at least 18 and A_S + O_S is at least 18.
• E) 4A_P + O_P is at least A_D + 3O_D and A_D + 3O_D is at least 4A_P + O_P.

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Definitions:

Process Costing

A costing method used in manufacturing where costs are assigned to batches or production runs, typically suitable for standardized products.

Weighted-Average Method

An inventory costing method that assigns a cost to inventory items based on the weighted average of costs of similar goods available during the period.

Cost Reconciliation

The process of analyzing and adjusting the differences between reported costs and actual costs.

Process Costing

A method of cost accounting used for homogeneous products, where costs are averaged over the units to compute a cost per unit, typically used in industries like chemicals or food processing.