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

question 7

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 $33,000. 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) $4,000
• B) $16,000
• C) $8,550
• D) $8,000
• E) There is not enough information here to be able to determine the answer.

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Definitions:

Daily Interest

Daily Interest calculates the amount of interest that accrues each day on a loan or investment, based on the principle and the annual interest rate, divided by the number of days in a year.

Financial Calculation

The process of using mathematical and statistical methods to analyze and assess financial data and scenarios.

Daily Interest

Interest calculated on a daily basis, typically used in various financial products and accounts.

Exponential Notation

A way of writing numbers that accommodates values too large or small for ordinary notation, using a base number raised to a power.