Ernie's Utility Function Is U(x, Y)= 32xy

question 25

Multiple Choice

Ernie's utility function is U(x, y) = 32xy.He has 10 units of good x and 8 units of good y.Waldo's utility function for the same two goods is U(x, y) = 3x +5y.Waldo has 9 units of x and 13 units of y.

• A)Waldo prefers Ernie's bundle to his own, but Ernie prefers his own bundle to Waldo's.
• B)Each prefers the other's bundle to his own.
• C)Neither prefers the other's bundle to his own.
• D)Ernie prefers Waldo's bundle to his own bundle, but Waldo prefers his own bundle to Ernie's.
• E)Since they have different preferences, there is not enough information to determine who envies whom.

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Definitions:

CCC

The Civilian Conservation Corps, a public work relief program that operated in the United States for unemployed, unmarried men during the Great Depression, part of the New Deal.

Agricultural Adjustment Administration

A New Deal agency established in 1933 to improve agricultural prices by controlling production, often through paying farmers not to plant on part of their land.

Sharecroppers

Farmers who rent small plots of land to farm and in return, they give a portion of their crop yield to the landlord as rent.

Landlords

Individuals or entities that rent land, buildings, or housing to tenants for a specified period under a lease agreement.