each. You are choosing between a UofT hoodie and a Roots hoodie. They both cost $45 Suppose the price of the UofT hoodie increases by $5 and your value (expressed in dollars) from the Roots hoodie decreases by $5. When this happens, your Opportunity Cost of buying the UofT hoodie Willingness to pay for the UofT hoodie A. increases by $5; decreases by $5. B. decreases by $5; increases by $5. C. increases by $5; increases by $5. D. stays the same; decreases by $5. E. stays the same; increases by $5. and your

each. You are choosing between a UofT hoodie and a Roots hoodie. They both cost $45 Suppose the price of the UofT hoodie increases by $5 and your value (expressed in dollars) from the Roots hoodie decreases by $5. When this happens, your Opportunity Cost of buying the UofT hoodie Willingness to pay for the UofT hoodie A. increases by $5; decreases by $5. B. decreases by $5; increases by $5. C. increases by $5; increases by $5. D. stays the same; decreases by $5. E. stays the same; increases by $5. and your

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Let the following table represents the total utility of a given consumer, in the cardinal utility approach. Q 1 2 3 4 5 6 7 TUX 8 14 18 20 20 18 16 TUY 6 10 13 15 16 16 14 MUX MUY MUX/PX MUY/PY Calculate the MUX and MUY and fill the table in the 4th and 5th rows. If the two products (X&Y) are free goods how many of X and Y should the consumer take to maximize utility? What is the maximum utility of X and Y if they are free? Let now price of X is 4 birr per unit and price of Y is 2 birr per unit. Calculate MUX/PX and MUY/PY and fill the 6th and 7th row. Assuming the consumer has any amount of money (enough budget) how many of X and Y should the consumer buy, to maximize utility? What is the total utility of X and Y? Let now price of X is 4 birr per unit and price of Y is 2 birr per unit and budget of the consumer for consumption of X and Y is 20 birr. Given budget constraint how many of X and Y should the consumer buy to maximize utility?
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The New York Times reports that cruise lines have been slashing prices and cruise sales are up. It says this surge of interest tells us that despite the uncertain economic climate, people clearly need more fun in their lives and view their vacations as a valuable and necessary part of it. How would you make a rational choice about taking a cruise? To make a rational choice you would O A compare the marginal benetit from taking the cruise with the marginal cost of the cruise O B. consider the length of the cruise and the route it will take OC. chose the cruise line with the cheapest prnce regardless of its amenities O D. check with the National Hurricane Center about weather onroute O E chose the ship with the most amenities regardless of the price of the cruise
5. Sheila and Bruce are taking a canoe trip. Sheila brought 10 boxes of peanuts (x) and 15 bags of chips (y). Sheila's utility function is U*(x,y) = lnvx*+ Invy°. Bruce also brought 20 boxes of peanuts and 5 bags of chips. Bruce's utility function is UB(x.y) = min[x', y'I. a) Illustrate the endowment point and draw a sample set of indifference curves through the endowment point. b) If Sheila and Bruce trade what will be the pattern of mutually beneficial trade? c) If the terms of trade are the number of bags of chips (y) per box of peanuts (x) then what is the largest value that these terms can be for a mutually beneficial trade in this economy? d) Find one mutually beneficial trade where the terms of trade are 1 bag of chips (y) per 2 boxes of peanuts (x). Suppose that Sheila and Bruce set up two competitive markets for peanuts and chips. Below you will show that if the price of peanuts (x) is $1 and the price of chips (y) is $2 then the markets for both peanuts and chips will clear.…
2. Determining opportunity cost Juanita is deciding whether to buy a skirt that she wants, as well as where to buy it. Three stores carry the same skirt, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, Discounted price located 15 minutes away from where she works, and pay a Marked-up price marked-up price of $122 for the skirt: Juanita's office Original price Travel Time Each Way Price of a Skirt Store (Minutes) (Dollars per skirt) Local Department Store 15 122 Across Town 30 90 Neighboring City 60 78 Juanita makes $60 an hour at work. She has to take time off work to purchase her skirt, so each hour away from work costs her $60 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling. Complete the following table by…
Lucinda collects Kewpie dolls, and can afford to buy up to six dolls. The table below describes the marginal benefit Lucinda gets for each additional doll she adds to her collection. Lucinda's Marginal Benefit of Kewpie Dolls Marginal Benefit (dollars) $15 14 13 12 11 10 Kewpie Dolls 1 2 3 4 5 6 4 Instructions: Enter your answers as a whole number. a. If the price of Kewpie dolls is $11 per doll, how many dolls would Lucinda buy if she is rational? 4 doll(s) b. If the price of Kewpie dolls rose to $12 per doll, how many dolls would Lucinda buy if she is rational? 3 doll(s)
2. Determining opportunity cost Juanita is deciding whether to buy a suit that she wants, as well as where to buy it. Three stores carry the same suit, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, located 15 Discounted minutes away from where she works, and pay a marked-up Marked-up price price price of $102 for the suit: Juanita's office Original price Travel Time Each Way Price of a Suit (Minutes) (Dollars per suit) Store Local Department Store 15 102 Across Town 30 88 Neighboring City 60 63 Juanita makes $18 an hour at work. She has to take time off work to purchase her suit, so each hour away from work costs her $18 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling. Complete the following table by computing…
The table below shows the marginal benefit that Dan derives by consuming different quantities of tacos and soda .The price of a taco is $3 and the price of soda is $1. Quantity sodas Tacos Marginal benefits ($) Marginal benefits($) 1 10 18 2 8 12 3 6 6 4 4 3 5 2 1 6 1 0.6 Refer to the table above.If Dan consumes 3 tacos and 0 sodas -not necessary his optical choice- how much consumer surplus is he enjoying? a) $ 24 b) $ 27 c) $ 9 d) $6
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A date with Alex costs you $100 and gives you an additional 1000 units of utility. A date with Kelly costs you $200 and an additional 4,000 units of utility. Based only on the information you have, using the theory of rational choice, you most likely would: O be indifferent between the two dates O go on a date with Alex because the marginal utility per dollar is the greater of the two O go on a date with Kelly O go on a date with Alex
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