In Problem 1, Suppose That Morris Has the Utility Function

question 19

Multiple Choice

In Problem 1, suppose that Morris has the utility function U(b, w) = 5b + 15w and Philip has the utility function U(b, w) = bw. If we draw an Edgeworth box with books on the horizontal axis and wine on the vertical axis and if we measure Morris's consumptions from the lower left corner of the box, then the contract curve contains

• A) a straight line with slopepassing through the lower left corner of the box.
• B) a straight line with slopepassing through the upper right corner of the box.
• C) a straight line running from the upper right corner of the box to the lower left.
• D) a curve that gets steeper as you move from left to right.
• E) a curve that gets flatter as you move from left to right.

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Definitions:

Warranty of Authority

A legal assurance by an agent to a third party that they have the authority to act on behalf of another person or entity.

Estate

The collective net worth of an individual, including all of their assets, property, and financial interests, especially as considered in the context of succession or inheritance.

Authority

The power or right to give orders, make decisions, and enforce obedience.

Inventory Authority

The granted power or right to oversee and manage the list of items or properties, often within a business context for stock management purposes.