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:

Overhead Applied

The portion of overhead costs allocated to individual products or services based on a predetermined rate.

Indirect Materials

Substances utilized during manufacturing that cannot be specifically associated with any single product, like machine lubricants.

Work in Process

Goods that are in various stages of the manufacturing process but are not yet completed, representing a component of a company's inventory.

Raw Materials Inventory

The stock of materials used in the manufacturing process before they are transformed into finished goods.