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Remember Bonnie and Clyde from Your Workbook? Suppose That Their

Question 1

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Remember Bonnie and Clyde from your workbook? Suppose that their total profits are 40H, where H is the number of hours they work per year. Their utility functions are, respectively, UB(CB, H) = CB - 0.02H2 and UC(CC, H) = CC - 0.03H2, where CB and CC are their private goods consumptions and H is the number of hours they work per year. If they find a Pareto optimal choice of hours of work and income distribution, the number of hours they work per year must be


A) 500
B) 400
C) 150
D) 250.

Correct Answer:

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