Recall Lucy and Melvin from Problem 6

question 10

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 $21,000. They agree on a Pareto optimal pattern of expenditures in which the amount that is spent on Lucy's private consumption is $6,000. How much do they spend on public goods?

• A) $5,550
• B) $10,000
• C) $2,500
• D) $5,000
• E) There is not enough information here to be able to determine the answer.

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Definitions:

Miller

Refers to George A. Miller, a psychologist known for his work on the magical number seven, plus or minus two, related to the limits of human memory capacity.

Iconic Memory

A type of visual sensory memory that holds a brief replica of visual scenes for a very short duration before fading or being processed further.

Visual Copy

An exact reproduction or duplicate of a visual stimulus.

Sensory Item

An object or stimulus that engages one or more of the five senses, designed to have a soothing or stimulating effect.