Suppose That Romeo Has the Utility Function U = S

question 12

Multiple Choice

Suppose that Romeo has the utility function U = S ⁷_RS³_J and Juliet has the utility function U = S ³_RS⁷_J, where S_R is Romeo's spaghetti consumption and S_J is Juliet's.They have 60 units of spaghetti to divide between them.

• A)Romeo would want to give Juliet some spaghetti if he had more than 30 units of spaghetti.
• B)Romeo would want to give Juliet some spaghetti if he had more than 38 units of spaghetti.
• C)Romeo and Juliet would never disagree about how to divide the spaghetti.
• D)Juliet would want to give Romeo some spaghetti if she had more than 40 units.
• E)Juliet would want to give Romeo some spaghetti if she had more than 42 units of spaghetti.

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers at each price level.

Purely Competitive Industry

An industry with many sellers offering identical products, where no single seller can influence market price, leading to perfect competition.

Competitive Firms

Refers to companies operating in a market where there are many sellers and buyers, products are similar, and there is free entry and exit from the market.

Price Takers

Describes individuals or companies that accept the market price as given, without having the influence to alter the price of the good or service they are selling or buying.