Say Anna's Utility Function Was Given by UA = (MA)(MM)

question 5

Multiple Choice

Say Anna's utility function was given by UA = (MA) (MM) , where MA is Anna's wealth and MM is Marie's wealth. Initially, Anna has 160 units of wealth and Marie has 40. In order to maximize her utility Anna should

• A)transfer all her wealth to Marie.
• B)transfer 60 units to Marie.
• C)keep all her wealth for herself.
• D)get 40 units from Marie.

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Definitions:

Price of Capital

The expense involved in using capital goods, often involving interest rates or rental costs for financial or physical capital.

Perfectly Competitive Market

A theoretical market structure characterized by a large number of buyers and sellers, homogeneous products, and no barriers to entry or exit, leading to price takers rather than price makers.

Market Price

The present cost at which a service or asset is available for purchase or sale in the marketplace.

Pairs of Earrings

Not an economic key term, but could be referenced in examples relating to consumer goods or inventory.