Recall Lucy and Melvin from Problem 6

question 11

Multiple Choice

Recall Lucy and Melvin from Problem 6. Lucy's utility function is 2X_L + G and Melvin's utility function is X_MG, where G is their expenditures on the public goods they share in their apartment and where X_L and X_M are their respective private consumption expenditures. The total amount they have to spend on private goods and public goods is $33,000. They agree on a Pareto optimal pattern of expenditures in which the amount that is spent on Lucy's private consumption is $9,000. How much do they spend on public goods?

• A) $8,550
• B) $4,000
• C) $8,000
• D) $16,000
• E) There is not enough information here to be able to determine the answer.

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Definitions:

Postmaterialist Thesis

A theory suggesting that after material basic needs are met, individuals and societies tend to prioritize non-materialistic values and cultural and intellectual needs.

Bread-and-Butter Issues

Fundamental and practical problems or concerns, typically relating to basic needs or economic well-being, that affect everyday life.

Inequality

The state of not being equal, especially in terms of status, rights, and opportunities, leading to disparities in income, wealth, and living conditions.

Preconditions

Conditions or requirements that must exist or be met before a certain event can occur or a process can proceed.