Professor Nightsoils Utility Function Is U N (B N, P

question 63

Multiple Choice

Professor Nightsoils utility function is U N (B N, P N) = B_N + 4P^1/2_N and Dean Interfaces utility function is U I (B I, P I) = B_I + 2P^1/2_I, where B N and B I are the number of bromides and P N and P I are the number of platitudes consumed by Nightsoil and Interface respectively.If Nightsoils initial endowment is 4 bromides and 10 platitudes and if Interfaces initial endowment is 3 bromides and 15 platitudes, then at any Pareto efficient allocation in which both consume positive amounts of both goods,

• A)Interface consumes 3.50 bromides.
• B)Nightsoil consumes the same ratio of bromides to platitudes as Interface.
• C)Interface consumes 2 bromides.
• D)Interface consumes 5 platitudes.
• E)Interface consumes 3 bromides.

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Definitions:

Competitive Firm

A company that operates in a market where it has to compete with other firms for customers, setting prices based on market demand and supply.

Competitive Firm

A business operating in a market where it has little to no control over the price of its products because of competition from other firms.

Cost Table

A detailed listing of all costs associated with a project or business operation, used for budgeting and financial management purposes.

Break Even

The point at which total revenue equals total costs, making a business neither profitable nor unprofitable at this juncture.