Tom and Jerry are room mates. They spend a total of 80 hours a week together in their room. Tom likes loud music, even when he sleeps. His utility function is UT(CT, M) = CT + M, where CT is the number of cookies he eats per week and M is the number of hours of loud music per week that is played while he is in their room. Jerry hates all kinds of music. His utility function is M² 12 Uj= Cj- Every week, Tom and Jerry each get 12 chocolate chip cookies sent from home. They have no other source of cookies. We can describe this situation with a box that looks like an Edgeworth box. The box has cookies on the horizontal axis and hours of music on the vertical axis. Let the bottom-left corner be the origin for Tom, and the bottom-right corner be the origin for Jerry. Suppose the dorm's policy is "rock-n-roll is good for the soul." Thus, M-80 in the initial endowment. Consider a trade between Tom and Jerry: Jerry gives Tom one cookie for reducing one hour of music. Then the change in Jerry's utility will be
Tom and Jerry are room mates. They spend a total of 80 hours a week together in their room. Tom likes loud music, even when he sleeps. His utility function is UT(CT, M) = CT + M, where CT is the number of cookies he eats per week and M is the number of hours of loud music per week that is played while he is in their room. Jerry hates all kinds of music. His utility function is M² 12 Uj= Cj- Every week, Tom and Jerry each get 12 chocolate chip cookies sent from home. They have no other source of cookies. We can describe this situation with a box that looks like an Edgeworth box. The box has cookies on the horizontal axis and hours of music on the vertical axis. Let the bottom-left corner be the origin for Tom, and the bottom-right corner be the origin for Jerry. Suppose the dorm's policy is "rock-n-roll is good for the soul." Thus, M-80 in the initial endowment. Consider a trade between Tom and Jerry: Jerry gives Tom one cookie for reducing one hour of music. Then the change in Jerry's utility will be
Chapter10: Consumer Choice Theory
Section: Chapter Questions
Problem 9P
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![Tom and Jerry are room mates. They spend a total of 80 hours a week together in
their room. Tom likes loud music, even when he sleeps. His utility function is
UT(CT, M) = CT + M,
where CT is the number of cookies he eats per week and M is the number of hours of
loud music per week that is played while he is in their room. Jerry hates all kinds of
music. His utility function is
M²
12
UJ = CJ
Every week, Tom and Jerry each get 12 chocolate chip cookies sent from home. They
have no other source of cookies. We can describe this situation with a box that looks
like an Edgeworth box. The box has cookies on the horizontal axis and hours of music
on the vertical axis. Let the bottom-left corner be the origin for Tom, and the
bottom-right corner be the origin for Jerry.
Suppose the dorm's policy is "rock-n-roll is good for the soul." Thus, M=80 in the
initial endowment. Consider a trade between Tom and Jerry: Jerry gives Tom one
cookie for reducing one hour of music. Then the change in Jerry's utility will be](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe0e777ab-c514-4163-8f7b-2f1ace01003d%2F88b69fac-12cb-442b-8274-acf3d78104b4%2Foxltk4i_processed.png&w=3840&q=75)
Transcribed Image Text:Tom and Jerry are room mates. They spend a total of 80 hours a week together in
their room. Tom likes loud music, even when he sleeps. His utility function is
UT(CT, M) = CT + M,
where CT is the number of cookies he eats per week and M is the number of hours of
loud music per week that is played while he is in their room. Jerry hates all kinds of
music. His utility function is
M²
12
UJ = CJ
Every week, Tom and Jerry each get 12 chocolate chip cookies sent from home. They
have no other source of cookies. We can describe this situation with a box that looks
like an Edgeworth box. The box has cookies on the horizontal axis and hours of music
on the vertical axis. Let the bottom-left corner be the origin for Tom, and the
bottom-right corner be the origin for Jerry.
Suppose the dorm's policy is "rock-n-roll is good for the soul." Thus, M=80 in the
initial endowment. Consider a trade between Tom and Jerry: Jerry gives Tom one
cookie for reducing one hour of music. Then the change in Jerry's utility will be
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