A Small Economy Has Only Two Consumers, Boris and Vanessa

A small economy has only two consumers, Boris and Vanessa. Boris's utility function is U(x, y) . Vanessa's utility function is U(x, y) = x + 2y. Boris is endowed with 160 units of x and 60 units of y. They make trades to reach a Pareto optimal allocation of resources in which both persons consume positive amounts. How much y does Boris consume?

A) 32 units
B) 19 units
C) 14 units
D) 16 units
E) There is not enough information to determine how much y he will consume.

Correct Answer:

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