Lucy's Utility Function Is 2X_L + G and Melvin's Utility

question 14

Multiple Choice

Lucy's utility function is 2X_L + G and Melvin's utility function is X_MG, where G is their expenditures on the public goods they share in their apartment and where X_L and X_M are their respective private consumption expenditures.The total amount they have to spend on private goods and public goods is $21,000.They agree on a Pareto optimal pattern of expenditures in which the amount that is spent on Lucy's private consumption is $6,000.How much do they spend on public goods?

• A)$5,550
• B)$10,000
• C)$2,500
• D)$5,000
• E)There is not enough information here to be able to determine the answer.

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Definitions:

Acquired Needs Theory

a psychological theory that suggests human needs are developed over time based on life experiences.

Motivator-hygiene Theory

A theory stating that certain factors in the workplace cause job satisfaction (motivators), while a separate set of factors cause dissatisfaction (hygiene factors).

Hygiene Factors

Factors associated with job dissatisfaction, such as salary, company policies, and working conditions, according to Herzberg's Two-Factor Theory.

Motivator Factors

Elements in a job environment, such as recognition and opportunities for personal growth, that can significantly increase employee satisfaction and motivation.