Suppose That Paul and David Have Utility Functions U

question 5

Multiple Choice

Suppose that Paul and David have utility functions U = 5A_P + O_P and U = A_D + 3O_D, respectively, where A_P and O_P are Paul's consumptions of apples and oranges and A_D and O_D are David's consumptions of apples and oranges.The total supply of apples and oranges to be divided between them is 16 apples and 14 oranges.The "fair" allocations consist of all allocations satisfying

• A)5A_P + O_P is at least 94 and 2A_D + 3O_D is at least 58.
• B)A_D = A_P and O_D + O_P.
• C)A_D + O_D is at least 15 and A_S + O_S is at least 15.
• D)10A_P + 2O_P is at least 94 and 2A_D + 6O_D is at least 58.
• E)5A_P + O_P is at least A_D + 3O_D and A_D + 3O_D is at least 5A_P + O_P.

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Definitions:

Usury Statute

Laws that set the maximum interest rates that can be charged on loans.

Maximum Rate

The highest allowable interest rate or charge on a loan or financial contract as specified by law.

Covenant Not to Compete

A clause in an employment or business agreement that prohibits one party from competing against another for a certain period and in a specific geographic area.

Reasonableness

A standard of fairness, appropriateness, and rationality often used in legal and ethical judgments.