Suppose That Paul and David from Problem 7 Have Utility

question 7

Multiple Choice

Suppose that Paul and David from Problem 7 have utility functions U = 3A_P + O_P and U = A_D + 2O_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 10 apples and 20 oranges. The "fair" allocations consist of all allocations satisfying

• A) A_D = A_P and O_D = O_P.
• B) 6A_P + 2O_P is at least 50 and 2A_D + 4O_D is at least 50.
• C) 3A_P + O_P is at least 50 and 2A_D + 2O_D is at least 50.
• D) A_D + O_D is at least 15 and A_S + O_S is at least 15.
• E) 3A_P + O_P is at least A_D + 2O_D and A_D + 2O_D is at least 3A_P + O_P.

---

Definitions:

Balance Deficit

The economic condition where total expenditures exceed total revenues in a given period, often in reference to national budgets or trade balances.

Current Account Deficit

Occurs when a country's total imports of goods, services, and transfers are greater than its total exports, indicating that it is spending more on foreign trade than it is earning.

Capital Account Deficit

Occurs when a country's total payments from its capital account transactions exceed its total receipts.

Goods Imports

The act of bringing in goods and services from a foreign country for trade or sale within a domestic market.