Suppose That Paul and David from Problem 7 Have Utility

question 12

Multiple Choice

Suppose that Paul and David from Problem 7 have utility functions U = 5A_P + O_P and U = A_D + 3O_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 14 oranges. The "fair" allocations consist of all allocations satisfying

• A) 5A_P + O_P is at least 94 and 2A_D + 3O_D is at least 58.
• B) A_D = A_P and O_D = O_P.
• C) A_D + O_D is at least 15 and A_S + O_S is at least 15.
• D) 10A_P + 2O_P is at least 94 and 2A_D + 6O_D is at least 58.
• E) 5A_P + O_P is at least A_D + 3O_D and A_D + 3O_D is at least 5A_P + O_P.

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Definitions:

English Penny Black

The world's first adhesive postage stamp used in a public postal system, issued in Great Britain in 1840.

Self-Interest

The motivation of individuals that drives them to act in pursuit of their own desires and benefits, often considered a fundamental economic assumption.

Vickrey Auction

A type of sealed-bid auction where bidders submit their bids without knowing the others' bids, and the highest bidder wins but pays the price bid by the second-highest bidder.

English Auction

A common auction format where the price ascends and participants bid openly against one another, with the item being sold to the highest bidder.