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| Suppose Juan’s preferences over goods X and Y can be expressed by the utility function U = 2X + Y, while Charlie’s preferences can be expressed by the utility function U = min (3X, 2Y). Suppose that Juan has 2 units of X and 2 units of Y, while Charlie has 3 units of X and 4 units of Y. a. What is the name for preferences like Juan’s? What about Charlie’s? b. What is the marginal utility of X for Juan given his current holdings? c. What is the marginal utility of X for Charlie given his current holdings? d. Will Juan and Charlie be willing to trade? If yes, give an example of an acceptable trade. If not, explain why not. |
