Bob and Ray Are Thinking of Buying a Sofa

question 22

Multiple Choice

Bob and Ray 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 $800 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)$533.33.
• B)$800.
• C)$1,200.
• D)$450.
• E)$1,600.

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Definitions:

Moral Decisions

Choices made based on distinguishing right from wrong and considering fairness, ethics, and the welfare of others.

Core Values

Fundamental beliefs or guiding principles that dictate behavior and action, often serving as a cultural cornerstone for organizations or individuals.

Ethical Dilemma

A situation where an individual faces a choice between two or more morally right or beneficial options, or the lesser of two evils, often involving a conflict of ethical principles.

Social Scientists

Professionals who study human society and social relationships through various methods of empirical investigation and critical analysis.