Suppose That Paul and David from Problem 7 Have Utility

question 6

Multiple Choice

Suppose that Paul and David from Problem 7 have utility functions U = 4A_P + O_P and U = A_D + 5O_D, respectively, where A_P and O_P are Paul's consumptions of apples and oranges and A_D and O_D are David's consumptions of apples and oranges. The total supply of apples and oranges to be divided between them is 16 apples and 16 oranges. The "fair" allocations consist of all allocations satisfying

• A) A_D = A_P and O_D = O_P.
• B) 8A_P + 2O_P is at least 80 and 2A_D + 10O_D is at least 96.
• C) 4A_P + O_P is at least 80 and 2A_D + 5O_D is at least 96.
• D) A_D + O_D is at least 16 and A_S + O_S is at least 16.
• E) 4A_P + O_P is at least A_D + 5O_D and A_D + 5O_D is at least 4A_P + O_P.

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Definitions:

Pre-acquisition Equity

The equity value of a company before it is acquired by another entity.

Post-acquisition Equity

The equity interest in a subsidiary held by the parent company after the acquisition date, reflecting the share of future earnings, reserves, and other changes in equity.

Consolidation Process

involves combining the financial statements of two or more companies into a single set of statements.

Consolidation Worksheet

A tool used in the preparation of consolidated financial statements that helps in adjusting and eliminating the financial information of the parent company and its subsidiaries.