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A Small Economy Has Only Two Consumers, Zeke and Maude

Question 61

Multiple Choice

A small economy has only two consumers, Zeke and Maude.Zeke's utility function is U(x, y) = x + 48y1/2.Maude's utility function is U(x, y) = x + 4y.At a Pareto optimal allocation in which both individuals consume some of each good, how much y does Zeke consume?


A) 36
B) 12
C) 5
D) 10
E) We can't tell without knowing the initial endowments.

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