Xavier and Yvette Are the Only Two Persons on a Desert

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(N_x, B_x) = N_xB_x. Yvette's utility function is U(N_y, B_y) = 2N_y + B_y. Xavier is endowed with 3 units of berries and 8 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) 12.50
B) 19
C) 7.50
D) 9.50
E) None of the above.

Correct Answer:

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