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

question 28

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 7 units of wine and Barbies endowment were 10 units of quiche and 7 units of wine and Barbie's endowment were 10 units of quiche and 7 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 14 units of wine that he consumed.
• B)Barbie would consume 10 units of quiche for every 7 units of wine that she consumed.
• C)Ken would consume 5 units of quiche for every 7 units of wine that he consumed.
• D)Barbie would consume twice as much quiche as Ken.
• E)None of the above.

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Definitions:

John Maynard Keynes

A British economic thinker whose insights led to significant shifts in macroeconomic practices and the economic approaches of governments.

Economy

The organized system of human activity involved in the production, consumption, and trading of goods and services.

Say's Law

An economic principle that suggests supply creates its own demand, meaning production of goods and services generates the purchasing power needed to buy those goods and services.

Supply

The total amount of a product or service that is available for purchase at any given price in a given market.