If Two People Have Identical Cobb-Douglas Utility Functions, Then in Every

question 21

True/False

If two people have identical Cobb-Douglas utility functions, then in every Pareto optimal allocation, they must consume all goods in the same proportions as each other.

---

Definitions:

Cournot Equilibrium

A situation in an oligopoly market where each firm chooses its optimal output, assuming the outputs of its competitors are fixed.

Fixed Costs

Costs that do not vary with the level of output or sales, such as rent, salaries, or property taxes.

Downward-Sloping

Characteristic of a curve on a graph indicating a decrease in one variable as another variable increases, often seen in demand curves.

Cournot Duopolists

Firms in a duopoly market structure who decide on their output level assuming the output of the competitor is fixed, leading to a strategic interdependence.