Hatfield and McCoy Burn with Hatred for Each Other

question 27

Multiple Choice

Hatfield and McCoy burn with hatred for each other. They both consume corn whisky. Hatfield's utility function is and McCoy's utility is , where W_H is Hatfield's whisky consumption and W_M is McCoy's whisky consumption, measured in gallons. The sheriff has a total of 60 gallons of confiscated whisky which he could give back to them. For some reason, the sheriff wants them both to be as happy as possible and he wants to treat them equally. The sheriff should give them each

• A) 30 gallons.
• B) 20 gallons and spill 20 gallons in the creek.
• C) 24 gallons and spill the rest in the creek.
• D) 10 gallons and spill 40 gallons in the creek.
• E) 5 gallons and spill the rest in the creek.

---

Definitions:

Average Variable Cost

The total variable cost divided by the quantity of output produced; it is the cost of producing an additional unit of a good or service.

Purely Competitive

Market structures characterized by many buyers and sellers, where no single entity has the market power to influence the price of a homogeneous product.

Profit-Maximizing

The process by which a firm adjusts its production and sale to achieve the highest possible profit.

Short-Run

A period during which at least one input in the production process is fixed, affecting the firm's ability to adjust to changes in demand.