Suppose That Romeo Has the Utility Function U = S

question 14

Multiple Choice

Suppose that Romeo has the utility function U = S ⁶_RS⁴_J and Juliet has the utility function U = S⁴_RS ⁶_J, where S_R is Romeo's spaghetti consumption and S_J is Juliet's.They have 70 units of spaghetti to divide between them.

• A)Romeo would want to give Juliet some spaghetti if he had more than 35 units of spaghetti.
• B)Juliet would want to give Romeo some spaghetti if she has more than 40 units.
• C)Romeo and Juliet would never disagree about how to divide the spaghetti.
• D)Romeo would want to give Juliet some spaghetti if he has more than 38 units of spaghetti.
• E)Juliet would want to give Romeo some spaghetti if she has more than 42 units of spaghetti.

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Definitions:

Interest

The expense associated with taking out a loan, usually shown as a percentage of the total amount loaned.

Interest Earned

The amount of interest generated from an investment or savings over a certain period of time.

Account

A record or statement of financial expenditure and receipts relating to a specific period or purpose; also used to refer to a customer's relationship with a financial institution.

Simple Interest

Interest computed solely on the initial amount invested, excluding any previously earned interest.