They Are Thinking of Buying a Sofa

question 10

Multiple Choice

They are thinking of buying a sofa.Bob's utility function is U_B(S, M_B) = (1 + S) M_B and Ray's utility function is U_R(S, M_R) = (3 + S) M_R, where S = 0 if they don't get the sofa and S = 1 if they do and where M_B and M_R are the amounts of money they have respectively to spend on their private consumptions.Bob has a total of $2,000 to spend on the sofa and other stuff.Ray has a total of $1,600 to spend on the sofa and other stuff.The maximum amount that they could pay for the sofa and still arrange to both be better off than without it is

• A)$2,100.
• B)$533.33.
• C)$750.
• D)$1,400.
• E)$2,800.

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Definitions:

Egocentrism

The inability to differentiate between self and others, leading to viewing everything solely from one's own perspective.

Preconventional Morality

The first level of Kohlberg's theory of moral development, where moral understanding is based on rewards, punishment, and personal self-interest.

Babinski Reflex

A reflex action in which the big toe remains extended or extends itself when the sole of the foot is stimulated, indicative of abnormalities in the central nervous system.

Moro Reflex

An infantile reflex triggered by a sudden loss of support, where the infant feels as if it is falling, manifesting in spreading arms, pulling arms in, and crying.