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

question 11

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 $24,000.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)$6,000
• B)$3,000
• C)$6,050
• D)$12,000
• E)There is not enough information here to be able to determine the answer.

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Definitions:

Substitute Labor

involves using alternative workforce options, such as temporary or gig workers, in place of regular employees to perform tasks or jobs.

Price of Capital

The cost of using capital assets, reflected in the interest rate or rate of return that investors demand for using their capital.

Total Product

The overall quantity of output that a firm produces, usually in a given period of time, measured in terms of units.

Average Product

The output per unit of input, calculated by dividing the total product by the quantity of input.