Ken's Utility Function Is U(Q_K, W_K)=Q_KW_K and Barbie's Utility Function

question 15

Multiple Choice

Ken's utility function is U(Q_K, W_K) =Q_KW_K and Barbie's utility function is U(Q_B, W_B) =Q_BW_B.If Ken's initial endowment were 6 units of quiche and 9 units of wine and Barbie's endowment were 12 units of quiche and 9 units of wine, then at any Pareto optimal allocation where both persons consume some of each good,

• A)Ken would consume 18 units of quiche for every 18 units of wine that he consumes.
• B)Barbie would consume 12 units of quiche for every 9 units of wine that she consumes.
• C)Ken would consume 6 units of quiche for every 9 units of wine.
• D)Barbie would consume twice as much quiche as Ken.
• E)None of the above.

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Definitions:

Returns to Scale

The speed at which production levels rise due to a corresponding rise in all contributing factors.

Labor Hours

The total hours of work put in by workers or employees during a specified period.

Market Costs

Expenses incurred by companies during the production and distribution of goods or services in the marketplace.

Hydraulic Lifts

Mechanical devices that use fluid pressure to raise or lower objects, often used in automotive repairs and construction.