Question
An economy has two people Charlie and Doris. There are two goods,apples and bananas. Charlie has an initial endowment of 3 apples and12 bananas. Doris
An economy has two people Charlie and Doris. There are two goods,apples and bananas. Charlie has an initial endowment of 3 apples and12 bananas. Doris has an initial endowment of 6 apples and 6 bananas.Charlie's utility function is U(AC ,BC ) = AC BC where AC is his appleconsumption and BC is his banana consumption. Doris's utility functionis U(AD,BD) = ADBD where AD and BD are her apple and bananaconsumptions. At every Pareto optimal allocation,(a) Charlie consumes the same number of apples as Doris.(b) Charlie consumes 9 apples for every 18 bananas that he consumes.(c) Doris consumes equal numbers of apples and bananas.(d) Charlie consumes more bananas per apple than Doris does.(e) Doris consumes apples and bananas in the ratio of 6 apples for every6 bananas that she consumes.
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