Suppose That in Problem 8, Mutt's Utility Function Is U(m

question 26

Multiple Choice

Suppose that in Problem 8, Mutt's utility function is U(m, j) = max{ 3m, j} and Jeff's utility function is U(m, j) = 2m + j. Mutt is initially endowed with 2 units of milk and 2 units of juice, and Jeff is initially endowed with 6 units of milk and 6 units of juice. If we draw an Edgeworth box with milk on the horizontal axis and juice on the vertical axis and if we measure goods for Mutt by the distance from the lower left corner of the box, then the set of Pareto optimal allocations includes the

• A) left edge and bottom edge of the Edgeworth box.
• B) right edge of the Edgeworth box but no other edges.
• C) left edge of the Edgeworth box but no other edges.
• D) bottom edge of the Edgeworth box but no other edges.
• E) right edge and top edge of the Edgeworth box.

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Definitions:

Weighted-Average Method

An inventory costing method that assigns a cost to inventory on the basis of the average cost of all similar items in the inventory.

Lubricating Department

A specialized division in a manufacturing or maintenance facility focused on the application of lubricants to machinery and equipment to reduce friction and wear.

Assembly Department

A section in a manufacturing plant where components are assembled into finished goods.

Beginning Work

The value or quantity of inventory on hand at the start of a accounting period before any production or sales activities have occurred.