(See Problem 2

question 9

Multiple Choice

(See Problem 2.) Robinson Crusoe has exactly 8 hours per day to spend gathering coconuts or catching fish. He can catch 2 fish per hour or he can pick 8 coconuts per hour. His utility function is U(F, C) = FC, where F is his consumption of fish and C is his consumption of coconuts. If he allocates his time in the best possible way between catching fish and picking coconuts, his consumption will be the same as it would be if he could buy fish and coconuts in a competitive market where the price of coconuts is $1, his income is

• A) $64 and the price of fish is $4.
• B) $64 and the price of fish is $.50.
• C) $16 and the price of fish is $2.
• D) $80 and the price of fish is $2.
• E) $40 and the price of fish is $.50.

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Definitions:

Market Shares

The proportion of a market controlled by a particular company, product, or service in relation to total sales in the market.

Herfindahl Index

A measure of market concentration that sums the squares of the market shares of all firms in the industry.

Market Shares

The portion of a market controlled by a particular company or product, often expressed as a percentage.

Oligopoly

A market structure characterized by a small number of firms dominating the market, leading to limited competition.