In an Exchange Economy A's Utility Is Given by U_A

question 19

Multiple Choice

In an exchange economy A's utility is given by U_A = x + y
And B's by
U_B = min[x,2y].
The initial endowment for A is x = 10 y = 8 and for B,x = 8 y = 4.To reach the contact curve,these individuals must

• A)Trade 1x for 1y.
• B)Trade 2x for 1 y.
• C)Trade 1x for 2y.
• D)Do nothing,since they are already on the contract curve.

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Definitions:

Duty

A legal or moral obligation required to be fulfilled by an individual or organization.

Miles to the Gallon

A measure of a vehicle's fuel efficiency, indicating how many miles the vehicle can travel on one gallon of fuel.

Correct Figure

Accurate numerical representation or data that correctly reflects a specified measurement, value, or calculation.

Valid Contract

An agreement between two or more parties that is enforceable by law, containing all necessary elements like offer, acceptance, consideration, and legality of purpose.