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

question 16

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 $30,000.They agree on a Pareto optimal pattern of expenditures in which the amount that is spent on Lucy's private consumption is $9,000.How much do they spent on public goods?

• A)$7,000
• B)$14,000
• C)$8,050
• D)$3,500
• E)There is not enough information here to be able to determine the answer.

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Definitions:

Clayton Act

A U.S. antitrust law enacted in 1914 aimed at promoting fair competition and preventing monopolies.

Herfindahl Index

A measure of the size of firms in relation to the industry and an indicator of the amount of competition among them.

Horizontal Merger

A merger between firms that are in the same industry, often aimed at reducing competition and achieving economies of scale.

Herfindahl Index

An index calculating market concentration by summing the squares of the market shares of each firm within the industry.