Posted by **Brett** on Thursday, February 19, 2009 at 10:49am.

Suppose Fred and Ethel need to divide 20 pizza slices and 10 cans of beverage. Fred's utility function is given by the equation U=Min(Z,B), where Z is the amount of pizza and B is the amount of beverage. Ethel's utility is given by the equation U=Min(1/2Z,B). What are the efficient allocation of Pizza and Beverage?

- college Econ -
**economyst**, Friday, February 20, 2009 at 9:24am
So for Fred, Z and B are efficiently allocated when Z=B. Further, there are no diminishing returns. That is MU at Z0=B0 is the same as MU at Z1=B1. For Ethel, like Fred, there are no diminishing returns. However, efficient allocation calls for 2Z=B.

So, it may not be equitable, but one efficient allocation is to give everything to Ethel.

## Answer This Question

## Related Questions

- Economics - Suppose Fred and Ethel need to divide 20 pizza slices and 10 cans of...
- economics - Suppose 15 peaches and 20 oranges need to be divided between fred ...
- Algebraic expressions - Please can you give me an algebraic expression for the ...
- Algebraic expressions - Please can you give me an algebraic expression for the ...
- Macroeconomics - Dave is buying pizza and soda. Suppose that a slice of pizza ...
- ECON - Suppose Fred has a utility function of the form U = X ½ Y ½ . Fred has an...
- Economics - 2. Suppose Fred has a utility function of the form U = X ½ Y ½ . ...
- Ratios - Please Help me figure out HOW to do this students in classes, displayed...
- macroeconomics - I have tried this 3 ways and this is my last chance to get ir ...
- Pre- algebra - This makes no sense: Students in classes, displayed below, ate ...

More Related Questions