Recall Lucy and Melvin from Problem 6

question 20

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 $39,000. 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) $9,550
• B) $20,000
• C) $5,000
• D) $10,000
• E) There is not enough information here to be able to determine the answer.

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Definitions:

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A public research university located in the Twin Cities of Minneapolis and St. Paul, Minnesota, known for its contributions to education, research, and outreach.

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