Suppose That Paul and David Have Utility Functions U =

question 27

Multiple Choice

Suppose that Paul and David have utility functions U = 4A 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 18 apples and 18 oranges.The fair allocations consist of all allocations satisfying the following conditions.

• A)A_D = A_P and O_D = O_P.
• B)8A_P + 2O_P is at least 90 and 2A_D + 6O_D is at least 72.
• C)4A_P+O_P is at least 90 and 2A_D + 3O_D is at least 72.
• D)A_D = O_D is at least 18 and A_S + O_S is at least 18.
• E)4A_P + O_P is at least A_D +3O_D and A_D + 3O_D is at least 4A_P + O_P.

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Definitions:

Consumer Surplus

The imbalance between the funds consumers are willing to dedicate to a good or service and the funds they actually dedicate.

Consumer Surplus

The discrepancy in the total spend consumers are willing to shoulder for a product or service as opposed to what they actually disburse.

Market Price

The present value at which a service or asset is available for purchase or sale in a market.

Consumer Surplus

The gap in the total financial commitment consumers are ready to make for a product or service versus their actual commitment.