They Are Thinking of Buying a Sofa

question 8

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) = (2 + 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 $1,200 to spend on the sofa and other stuff.Ray has a total of $1,200 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)$1,500.
• B)$600.
• C)$1,000.
• D)$550.
• E)$2,000.

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Definitions:

Anthropocentric

A viewpoint that regards humans as the central and most significant entities in the universe, often evaluating other beings in terms of their utility for humans.

Biocentric

An ethical viewpoint that emphasizes the intrinsic value of all living things, not just humans.

Ecofeminist

An advocate of the movement that sees a connection between the exploitation and degradation of the natural world and the subordination of women.