Lucy's Utility Function Is 2X_L + G and Melvin's Utility

question 19

Multiple Choice

Lucy's utility function is 2X_L + G and Melvin's utility function is X_MG, where G is their expenditures on the public goods they share in their apartment and where X_L and X_M are their respective private consumption expenditures. The total amount they have to spend on private goods and public goods is $30,000. They agree on a Pareto optimal pattern of expenditures in which the amount that is spent on Lucy's private consumption is $9,000. How much do they spent on public goods?

• A) $7,000
• B) $14,000
• C) $8,050
• D) $3,500
• E) There is not enough information here to be able to determine the answer.

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Definitions:

Process Costing

A costing method used where similar goods are mass-produced, and it involves accumulating production costs and assigning them to products.

Conversion Costs

The expenses associated with transforming raw materials into completed goods, encompassing direct labor and manufacturing overhead costs.

Curing Department

The Curing Department is a section within manufacturing where products undergo a process to achieve desired properties, such as hardening or drying.

Process Costing

A costing method used for homogeneous products that are produced in a continuous process, assigning costs based on average production costs.