Suppose That Romeo Has the Utility Function U =

question 24

Multiple Choice

Suppose that Romeo has the utility function U = S ⁵_RS ²_J and Juliet has the utility function U = S ²_RS ⁵_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 and Juliet would never disagree about how to divide the spaghetti.
• B)Romeo would want to give Juliet some spaghetti if he has more than 46 units of spaghetti.
• C)Romeo would want to give Juliet some spaghetti if he had more than 35 units of spaghetti.
• D)Juliet would want to give Romeo some spaghetti if she has more than 48 units.
• E)Juliet would want to give Romeo some spaghetti if she has more than 50 units of spaghetti.

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Definitions:

Debt-equity Ratio

A ratio illustrating the division of asset financing between shareholder equity and company debt.

Dividend Payout Ratio

The fraction of net income a firm pays to its shareholders in dividends, typically expressed as a percentage.

Dividend Payout Ratio

A metric that shows what portion of a company's earnings are distributed to shareholders in the form of dividends, typically expressed as a percentage.