An economy has two people, Charlie and Doris. There are two goods, apples and bananas. Charlie has an initial endowment of 6 apples and 6 bananas. Doris has an initial endowment of 12 apples and 3 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 more bananas per apple than Doris does.
B) Doris consumes equal numbers of apples and bananas.
C) Charlie consumes the same number of apples as Doris.
D) Charlie consumes 18 apples for every 9 bananas that he consumes.
E) Doris consumes 12 apples for every 3 bananas that she consumes.
Correct Answer:
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