Recall Bob and Ray in Problem 4

question 15

Multiple Choice

Recall Bob and Ray in Problem 4. They are thinking of buying a sofa. Bob's utility function is U_B(S, M_B) = (1 + S) M_B and Ray's utility function is U_R(S, M_R) = (3 + S) M_R, where S = 0 if they don't get the sofa and S = 1 if they do and where M_B and M_R are the amounts of money they have respectively to spend on their private consumptions. Bob has a total of $2,000 to spend on the sofa and other stuff. Ray has a total of $1,600 to spend on the sofa and other stuff. The maximum amount that they could pay for the sofa and still arrange to both be better off than without it is

• A) $2,100.
• B) $533.33.
• C) $750.
• D) $1,400.
• E) $2,800.

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Definitions:

Sherman Act

A foundational antitrust law in the United States aimed at preventing monopolies and promoting competition among businesses.

Clayton Act

A U.S. antitrust law enacted in 1914 aimed at increasing economic competition and preventing unfair business practices.

Wheeler-Lea Act

An amendment to the Federal Trade Commission Act in the United States, focusing on protecting consumers against unfair or deceptive acts in commerce.

Cardiovascular Mortality

Deaths caused by diseases related to the heart and blood vessels, often used as a measure of the public health impact of cardiovascular disease.