They Are Thinking of Buying a Sofa

question 10

Multiple Choice

They 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 $2,000 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)$2,100.
• B)$533.33.
• C)$750.
• D)$1,400.
• E)$2,800.

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Definitions:

Followers

Individuals who support and are guided by a leader or who are part of a group led by someone.

Prescriptive Leadership

Prescriptive leadership involves providing guidelines, rules, or advice to followers about what their behavior should be in various situations to achieve desired outcomes.

Descriptive Leadership

An approach that outlines how leaders behave in various situations, focusing on their actions and styles.

Distinctions

Differences or unique characteristics that set someone or something apart from others.