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A Small Economy Has Only Two Consumers, Boris and Vanessa

Question 24

Multiple Choice

A small economy has only two consumers, Boris and Vanessa.Boris's utility function is U(x, y) = x + 16y1/2.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.

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