26. Suppose a man and a woman are in love and care for the other’s happiness as

Question

26. Suppose a man and a woman are in love and care for the other’s happiness as well as their own consumption. Suppose the man is more selfish than the woman

        UM = CM2/3 UW1/3

        UW = CW1/2 UM1/2

They will maximize the joint happiness (UM + UW) where

a.

CM = 100; CW = 0

b.

CW = 100; CM = 100

c.

50 < CM < 100; 0 < CW < 50

d.

50 < CW < 100; 0 < CM < 50

ANSWER:  

POINTS:  

1

a.

CM = 100; CW = 0

b.

CW = 100; CM = 100

c.

50 < CM < 100; 0 < CW < 50

d.

50 < CW < 100; 0 < CM < 50

Explanation / Answer

They will maximize the joint happiness (UM + UW) where
Option C. 50 < CM < 100; 0 < CW < 50

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