An Economy Has Two People, Charlie and Doris

question 25

Multiple Choice

An economy has two people, Charlie and Doris. There are two goods, apples and bananas. Charlie has an initial endowment of 3 apples and 4 bananas. Doris has an initial endowment of 6 apples and 2 bananas. Charlie's utility function is U(A_C, B_C) = A_CB_C, where A_C is his apple consumption and B_C is his banana consumption. Doris's utility function is U(A_D, B_D) = A_DB_D, where A_D and B_D are her apple and banana consumptions. At every Pareto optimal allocation,

• A) Charlie consumes the same number of apples as Doris.
• B) Charlie consumes more bananas per apple than Doris does.
• C) Doris consumes equal numbers of apples and bananas.
• D) Charlie consumes 9 apples for every 6 bananas that he consumes.
• E) Doris consumes 6 apples for every 2 bananas that she consumes.

---

Definitions:

Gas Hydrate

A crystalline solid formed from a mixture of water and gas, under low temperature and high pressure conditions, often found in marine sediments and permafrost regions.

Ocean-floor Sediments

Deposits that cover the ocean floor, comprised of particles of organic and inorganic origin, such as sand, silt, and the remains of marine organisms.

Fossil Fuels

Natural fuels formed from the remains of living organisms over millions of years, including coal, oil, and natural gas.

Sedimentary Rocks

Rocks formed by the accumulation and consolidation of sediment, which can include minerals and organic matter, typically found in layered deposits.