Question

Section 1-Short questions 1. Arthur and Boudica are both Homo Economicus. Arthur has 20 archers () and 60 knights (A), and Boudica has 40 archers (r) and 40 knights OVB). Arthur's utility function: U.--In(r.) +-In Boudica's utility function: UBIn()+ nB Evaluate the following statement True, or False; and explain: "Arthur and Boudica's initial allocations (endowments) are not Pareto Efficient" I5 points] 2. Use the same utility functions and initial endowment as the previous question for Arthur and Boudica. Boudica -because of her legend as powerful warrior queen - has take-it-or-leave-it-power over Arthur (who although legendary made the fatal error of leaving his sword stuck in a stone) Evaluate the following statement as True, or False; and explain: "Boudica will offer (in round numbers and approximately) 7 archers in exchange for 15 knights leaving Arthur with the post-exchange allocation of 27 archers and 45 knights." 5 points] What is the Pareto efficient curve? In an exchange between two Homo Generosus, Hint: Think about the ways in which the pareto efficient curve is different when you have tuo I5 points] 3. the higher the degree of altruism, the shorter the Pareto efficient curve. Explain why. Homo Economics]