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A Small Economy Has Only Two Consumers, Charlie and Doreen

Question 3

Multiple Choice

A small economy has only two consumers, Charlie and Doreen. Charlie's utility function is U(x, y) A small economy has only two consumers, Charlie and Doreen. Charlie's utility function is U(x, y) . Doreen's utility function is U(x, y) = x + 7y. At a Pareto optimal allocation in which both individuals consume some of each good, how much y does Charlie consume? A) 121 B) 9 C) 22 D) 18 E) We can't tell without knowing the initial endowments. . Doreen's utility function is U(x, y) = x + 7y. At a Pareto optimal allocation in which both individuals consume some of each good, how much y does Charlie consume?


A) 121
B) 9
C) 22
D) 18
E) We can't tell without knowing the initial endowments.

Correct Answer:

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