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Bob and Ray Are Thinking of Buying a Sofa

question 21

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Bob and Ray are thinking of buying a sofa. Bob's utility function is UB(S, MB) = (1 + S) MB and Ray's utility function is UR(S, MR) = (3 + S) MR, where S = 0 if they don't get the sofa and S = 1 if they do and where MB and MR are the amounts of money they have respectively to spend on their private consumptions. Bob has a total of $2,000 to spend on the sofa and other stuff. Ray has a total of $2,400 to spend on the sofa and other stuff. The maximum amount that they could pay for the sofa and still arrange to both be better off than without it is

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Definitions:

Coracobrachialis

A muscle in the upper arm that facilitates flexion and adduction of the arm.

Pectoralis Major

A thick, fan-shaped muscle situated at the chest of the human body which aids in the movement of the shoulder joint.

Deltoid

A large, triangular muscle covering the shoulder joint and responsible for lifting the arm and giving it a range of motion.

Biceps Brachii

A muscle located in the upper arm responsible for flexing the elbow and supinating the forearm.

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