Professor Nightsoils Utility Function Is U N (B N, P

question 64

Multiple Choice

Professor Nightsoils utility function is U N (B N, P N) = B_N + 4P^1/2_N and Dean Interfaces utility function is U I (B I, P I) = B_I +2P^1/2_I where B N and B I are the number of bromides and P N and P I are the number of platitudes consumed by Nightsoil and Interface respectively.If Nightsoils initial endowment is 4 bromides and 25 platitudes and if Interfaces initial endowment is 2 bromides and 20 platitudes, then at any Pareto efficient allocation in which both consume positive amounts of both goods,

• A)Nightsoil consumes the same ratio of bromides to platitudes as Interface.
• B)Interface consumes 9 platitudes.
• C)Interface consumes 5 bromides.
• D)Interface consumes 3 bromides.
• E)Interface consumes 4 bromides.

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Definitions:

Bad Debt Expense

The cost associated with accounts receivable that a company does not expect to collect due to customer default.

Allowance For Doubtful Accounts

The contra asset account for accounts receivable.

Adjusting Journal Entry

A record in accounting that is used to adjust incomes and expenses to match the accounting period in which they actually occurred.

Net Realizable Value

The estimated selling price of goods minus the costs of their sale or disposal.