Kens Utility Function Is U(Q K, W K)= Q K

question 53

Multiple Choice

Kens utility function is U(Q K, W K) = Q K W K and Barbies utility function is U(Q B, W B) = Q B W B.If Kens initial endowment were 5 units of quiche and 9 units of wine and Barbies endowment were 10 units of quiche and 9 units of wine, then at any Pareto optimal allocation where both persons consumed some of each good,

• A)Ken would consume 15 units of quiche for every 18 units of wine that he consumed.
• B)Barbie would consume twice as much quiche as Ken.
• C)Ken would consume 5 units of quiche for every 9 units of wine that he consumed.
• D)Barbie would consume 10 units of quiche for every 9 units of wine that she consumed.
• E)None of the above.

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Definitions:

Normal Good

A type of good for which demand increases as the income of the consumer increases, reflecting a direct relationship between income and demand.

Inferior Good

A type of good whose demand decreases as the consumer's income increases, opposite to normal goods.

Complementary Good

A product or service that enhances the use or value of another product or service when used together.

Substitute

A good whose demand increases when the price of another good increases. For example, two brands of cola soft drinks are substitutes.