Morris Has the Utility Function U(b, W)= 4b + 4w

question 16

Multiple Choice

Morris has the utility function U(b, w) = 4b + 4w and Philip has the utility function U(b, w) = bw, where b is the number of books consumed per month and w is bottles of wine consumed per month.If we draw an Edgeworth box with books on the horizontal axis and wine on the vertical axis and if we measure Morris's consumptions from the lower left corner of the box, then the contract curve contains

• A)a curve that gets steeper as you move from left to right.
• B)a straight line with slope 1/1 passing through the upper right corner of the box.
• C)a straight line with slope 1/1 passing through the lower left corner of the box.
• D)a straight line running from the upper right corner of the box to the lower left.
• E)a curve that gets flatter as you move from left to right.

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Definitions:

Duty of Diligence

An obligation to exercise reasonable care and diligence in the performance of obligations, typically referring to the conduct expected of directors, officers, and professionals.

Conflict of Interest

A situation where an individual's personal interests could interfere with their professional duties or responsibilities.

RMBCA

The Revised Model Business Corporation Act, which provides a model framework for the governance of corporations, intended to standardize corporate law across jurisdictions.

Board of Directors

A group of individuals elected by shareholders to oversee the management and make key decisions for a corporation.