Lucy's Utility Function Is 2X_L + G and Melvin's Utility

Lucy's utility function is 2X_L + G and Melvin's utility function is X_MG, where G is their expenditures on the public goods they share in their apartment and where X_L and X_M are their respective private consumption expenditures. The total amount they have to spend on private goods and public goods is $28,000. They agree on a Pareto optimal pattern of expenditures in which the amount that is spent on Lucy's private consumption is $10,000. How much do they spent on public goods?

A) $12,000
B) $3,000
C) $6,000
D) $8,050
E) There is not enough information here to be able to determine the answer.

Correct Answer:

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