Morris Has the Utility Function U(b, W)= 4b + 4w

question 16

Multiple Choice

Morris has the utility function U(b, w) = 4b + 4w and Philip has the utility function U(b, w) = bw, where b is the number of books consumed per month and w is bottles of wine consumed per month.If we draw an Edgeworth box with books on the horizontal axis and wine on the vertical axis and if we measure Morris's consumptions from the lower left corner of the box, then the contract curve contains

• A)a curve that gets steeper as you move from left to right.
• B)a straight line with slope 1/1 passing through the upper right corner of the box.
• C)a straight line with slope 1/1 passing through the lower left corner of the box.
• D)a straight line running from the upper right corner of the box to the lower left.
• E)a curve that gets flatter as you move from left to right.

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Definitions:

Open Account Agreement

A financial arrangement between sellers and buyers allowing the buyer to pay the seller at a later date, commonly used in international trade.

Least Safe

Describing a condition or situation that poses the most significant risk of harm, injury, or danger to individuals or property.

Unfavorable Balance

Describes a situation where a country's imports exceed its exports, leading to a deficit in the balance of payments.

International Monetary Fund

An international organization established in 1944 to promote global monetary cooperation, secure financial stability, and facilitate international trade.