Kens utility function is U(Q K, W K ) = Q K W K and Barbies utility function is U(Q B, W B ) = Q B W B. If Kens initial endowment were 3 units of quiche and 11 units of wine and Barbies endowment were 6 units of quiche and 11 units of wine, then at any Pareto optimal allocation where both persons consumed some of each good,

Question

Quizplus · Accepted Answer

In a Pareto optimal allocation, the marginal rate of substitution (MRS) for Ken and Barbie should be equal. Given their utility functions, the MRS for both is the ratio of quiche to wine. Ken's initial endowment is 3 quiche and 11 wine, and Barbie's is 6 quiche and 11 wine. At a Pareto optimal allocation, Ken would consume 9 units of quiche for every 22 units of wine, maintaining the same MRS as Barbie.

Kens Utility Function Is U(Q K, W K ) =