An Economy Has Two People, Charlie and Doris

An economy has two people, Charlie and Doris.There are two goods, apples and bananas.Charlie has an initial endowment of 3 apples and 10 bananas.Doris has an initial endowment of 6 apples and 5 bananas.Charlie's utility function is U(A C, B C) = A C B C, where A C is his apple consumption and B C is his banana consumption.Doris's utility function is U(A D, B D) = A D B D, where A D and B D are her apple and banana consumptions.At every Pareto optimal allocation,

A) Charlie consumes the same number of apples as Doris.
B) Charlie consumes 9 apples for every 15 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 6 apples for every 5 bananas that she consumes.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free