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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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.…
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Suppose that Biff enters a hot dog eating contest. He enjoys hot dogs, so he gladly pays the $20 entry fee. Biff realizes there is very little chance that he will actually win the contest. He just likes the idea of being able to eat all the hot dogs he wants. The table below shows Biff’s utility from eating hot dogs. a. Use the table below and fill in the values for marginal utility. Hot Dogs and Biff's Utility Hot Dogs Total Utility (utils) Marginal Utility (utils) 5 48 — 6 52 7 54 8 55 9 54 10 51 b. Use the table to graph Biff's total utility and marginal utility for hot dogs. c. If Biff is rational, and has no intention of winning the hot dog eating contest, what is the optimal number of hot dogs he will eat? What is the maximum level of utility Biff can reach from eating that number of hot dogs? Optimal number of hot dogs: Maximum utility:
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Suppose Rosie's marginal utility from attending her 5th Atlanta Braves game was 40 and the marginal utility from attending her 1st Taylor Swift concert was 200. Assume that the price of a Braves ticket is $20 and the price of a Taylor Swift ticket is $120. Which of the following would be TRUE? 1) Rosie would attend more Taylor Swift concerts and fewer Braves games. 2) Rosie would attend more Braves games and fewer Taylor Swift concerts. 3) Rosie would not alter her behavior. 4) Rosie would attend less of both Braves games and Taylor Swift concerts.
Enrique is a movie buff. He likes to watch on demand movies from his cable company, which cost $5 each, and so likes to go to the local movie house, which charges $15 a ticket. Suppose that given his budget and his tentative spending plans, the marginal utility from a cable movie is 15 utils and the marginal utility of a movie at the local cinema is 45 utils. Assuming he is spending his entire budget, Enrique is currently maximizing his utility Enrique can increase his utility by buying more cable movies and watching fewer cinema movies Enrique can increase his utility by buying more cinema movies and fewer cable movies
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