An Economy Has Two People, Charlie and Doris

question 2

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 12 bananas. Doris has an initial endowment of 6 apples and 6 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 9 apples for every 18 bananas that he consumes.
• C) Doris consumes equal numbers of apples and bananas.
• D) Charlie consumes more bananas per apple than Doris does.
• E) Doris consumes 6 apples for every 6 bananas that she consumes.

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Definitions:

Substantial Research

Extensive and comprehensive investigation or study dedicated to a specific topic, aiming to uncover or verify information or theories.

Organization's Ability

A measure of how well a company can deploy its resources and capabilities to achieve its goals and objectives.

Utilization

Actual output as a percent of design capacity.

Units

Standard quantities used in measurement that serve as reference points for describing the magnitude of attributes.