Suppose That Romeo Has the Utility Function U = S

question 26

Multiple Choice

Suppose that Romeo has the utility function U = S ⁵_RS¹_J and Juliet has the utility function U = S¹_RS⁵_J, where S_R is Romeo's spaghetti consumption and S_J is Juliet's.They have 48 units of spaghetti to divide between them.

• A)Juliet would want to give Romeo some spaghetti if she had more than 38 units.
• B)Romeo would want to give Juliet some spaghetti if he had more than 24 units of spaghetti.
• C)Romeo and Juliet would never disagree about how to divide the spaghetti.
• D)Romeo would want to give Juliet some spaghetti if he had more than 36 units of spaghetti.
• E)Juliet would want to give Romeo some spaghetti if she had more than 40 units of spaghetti.

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Definitions:

Positive

Characterized by or displaying affirmation, constructive attributes, or optimism; also in economics, indicating numbers or conditions above zero or in surplus.

Complementary Goods

Products or services that are typically consumed together, as the consumption of one enhances the value or desire for the other.

Normal Good

A category of product that sees a rise in demand when consumer incomes go up, and a decrease when incomes fall.

Cross Elasticity of Demand

A measure of how the quantity demanded of one good responds to a change in price of another good, indicating the degree of substitutability between the two goods.