Asked by
Ashley Manning
on Oct 14, 2024
Verified
Xavier and Yvette are the only two persons on a desert island.There are only two goods, nuts and berries.Xavier's utility function is U(Nx, Bx) NxBx.Yvette's utility function is U(Ny, By) 5Ny By.Xavier is endowed with 4 units of berries and 13 units of nuts.Yvette is endowed with 6 units of berries and 8 units of nuts.In a competitive equilibrium for this economy, how many units of berries does Xavier consume?
A) 37.50
B) 69
C) 34.50
D) 32.50
E) None of the above.
Desert Island
A remote, uninhabited island, often used in hypothetical scenarios or survival narratives.
Competitive Equilibrium
A market state where supply equals demand, with no external influences, and prices are such that the quantity supplied is equal to the quantity demanded.
Utility Function
A mathematical representation in economics of how a consumer's preferences correspond to the consumption of goods and services.
- Assess the impact of primary endowments on resource allocation decisions.
- Acquire knowledge about the principle of utility functions and its effects on the decision-making process of consumers.
Verified Answer
JN
Learning Objectives
- Assess the impact of primary endowments on resource allocation decisions.
- Acquire knowledge about the principle of utility functions and its effects on the decision-making process of consumers.