Humphrey and Lauren are splitting 10 gallons of soda and 6 pounds of popcorn. Let's represent Humphrey's

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Humphrey and Lauren are splitting 10 gallons of soda and 6 pounds of popcorn. Let's represent Humphrey's preferences with the utility function
UH (SH, PH) = 3SH + PH
And Lauren's preferences with
UL(SL, PL) = 2SL + 4PL
Where SH and SL indicate their soda consumption, while PH and PL indicate their popcorn consumption. Consider the social welfare function
W (UH, UL) = UH + UL
According to this social welfare function, which of the following two allocations is better: (1) SH = 1, SL = 9, PH = 2, PL = 4, or
(2) SH = 5, SL = 5, PH = 3, PL = 3,
Which allocation does each consumer prefer? Considering all possible allocations, which is the most socially desirable?
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Microeconomics

ISBN: 978-1118572276

5th edition

Authors: David Besanko, Ronald Braeutigam

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