Suppose That Paul and David Have Utility Functions U =

question 7

Multiple Choice

Suppose that Paul and David have utility functions U = 4A_P + O_P and U = A_D + 5O_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 16 oranges.The "fair" allocations consist of all allocations satisfying

• A)A_D =A_P and O_D +O_P.
• B)8A_P + 2O_P is at least 80 and 2A_D + 10O_D is at least 96.
• C)4A_P + O_P is at least 80 and 2A_D + 5O_D is at least 96.
• D)A_D + O_D is at least 16 and A_S + O_S is at least 16.
• E)4A_P +O_P is at least A_D + 5O_D and A_D +5O_D is at least 4A_P + O_P.

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Definitions:

Gross Margin Ratio

A financial metric that measures the percentage of sales revenue that exceeds the cost of goods sold, indicating the efficiency of sales and production.

Return on Common Stockholders' Equity

A measure of profitability that calculates how much profit a company generates with the money shareholders have invested.

Total Asset Turnover

A financial ratio that measures a company's ability to use its assets efficiently to generate sales revenue.

Inventory Turnover

A measure of how quickly a company sells its inventory within a specific period, indicating the efficiency of inventory management.