In Problem 4, Ken's Utility Function Is U(Q_K, W_K) =

question 5

Multiple Choice

In Problem 4, Ken's utility function is U(Q_K, W_K) = Q_KW_K and Barbie's utility function is U(Q_B, W_B) = Q_BW_B. If Ken's initial endowment were 6 units of quiche and 9 units of wine and Barbie's endowment were 12 units of quiche and 9 units of wine, then at any Pareto optimal allocation where both persons consume some of each good,

• A) Ken would consume 18 units of quiche for every 18 units of wine that he consumes.
• B) Barbie would consume 12 units of quiche for every 9 units of wine that she consumes.
• C) Ken would consume 6 units of quiche for every 9 units of wine.
• D) Barbie would consume twice as much quiche as Ken.
• E) None of the above.

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Definitions:

Direct Labour

The labour costs directly attributable to the production of goods or services, including wages for workers who physically manufacture a product.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, excluding direct materials and direct labor costs.

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed expenses and then contribute to profit.

Variable Expenses

Costs that vary directly with the level of production or sales volume.