A Small Economy Has Only Two Consumers, Boris and Vanessa

question 24

Multiple Choice

A small economy has only two consumers, Boris and Vanessa.Boris's utility function is U(x, y) = x + 16y^1/2.Vanessa's utility function is U(x, y) = x + 2y.Boris is endowed with 160 units of x and 60 units of y.They make trades to reach a Pareto optimal allocation of resources in which both persons consume positive amounts.How much y does Boris consume?

• A)32 units
• B)19 units
• C)14 units
• D)16 units
• E)There is not enough information to determine how much y he will consume.

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Definitions:

Break-even

The point at which total costs and total revenue are equal, resulting in no profit or loss for the business.

Variable Cost

Outgoings that are directly influenced by how much is produced or sold, including the costs of labor and materials.

Monthly Dollar Sales

The total revenue generated from sales in a given month, expressed in U.S. dollars.

Variable Expenses

Expenses that fluctuate with changes in production volume or business activity.