In Problem 3, Professor Nightsoil's Utility Function Is U_N(B_N, P_N)

question 21

Multiple Choice

In Problem 3, Professor Nightsoil's utility function is U_N(B_N, P_N) and Dean Interface's utility function is U_I(B_I, P_I) . If Nightsoil's initial endowment is 6 bromides and 20 platitudes and if Interface's initial endowment is 2 bromides and 10 platitudes, then at any Pareto efficient allocation where both persons consume positive amounts of both goods,

• A) Nightsoil consumes the same ratio of bromides to platitudes as Interface.
• B) Interface consumes 6 platitudes.
• C) Interface consumes 4 bromides.
• D) Interface consumes 4 bromides
• E) Interface consumes 2 platitudes.

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Definitions:

Economic Cost

The total cost of choosing one action over another, including both direct costs and any lost opportunity costs.

Utility

The satisfaction or benefit derived from consuming goods and services.

Earning Power

The ability of an individual, company, or entity to generate income over time, often assessed for future potential.

Value of Time

This concept refers to the economic value of an individual's time, often measured by what they would be willing to pay to save time or by their wage rate.