Multiple Choice
Dan and Marilyn consume two goods, x and y.They have identical Cobb-Douglas utility functions.Initially Dan owns 10 units of x and 10 units of y.Initially Marilyn owns 40 units of x and 20 units of y.They make exchanges to reach a Pareto optimal allocation which is better for both than the no-trade allocation.Which of the following is not necessarily true about the allocation they trade to?
A) Marilyn consumes 5 units of x for every 3 units of y that she consumes.
B) The locus of Pareto optimal allocations is a diagonal straight line in the Edgeworth box.
C) Dan's consumption of x is greater than his consumption of y.
D) Dan consumes more than 10 units of x.
E) Marilyn consumes at least 40 units of x.
Correct Answer:

Verified
Correct Answer:
Verified
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