Question 11 ) Listen Suppose you have a $20 Amazon gift card with which you can buy (download) songs or videos. Songs cost $1.00 each and videos cost $2.00 each. The opportunity cost of one video: a) is constant and equal to ½ song. b) is constant and equal to 2 songs. c) is $1.00. d) increases as more videos are purchased Question 12 ) Listen Which of the following is NOT true? 1) Economists view the world through the lens of scarcity. 2) The perpetual problem of scarcity forcing people and society to make choices is the basis for the definition of economics. 3) Most of the disagreement among economists involves normative economics. 4) Rationality means that choices must be made generally the same among individuals.<--

Question 11 ) Listen Suppose you have a $20 Amazon gift card with which you can buy (download) songs or videos. Songs cost $1.00 each and videos cost $2.00 each. The opportunity cost of one video: a) is constant and equal to ½ song. b) is constant and equal to 2 songs. c) is $1.00. d) increases as more videos are purchased Question 12 ) Listen Which of the following is NOT true? 1) Economists view the world through the lens of scarcity. 2) The perpetual problem of scarcity forcing people and society to make choices is the basis for the definition of economics. 3) Most of the disagreement among economists involves normative economics. 4) Rationality means that choices must be made generally the same among individuals.<--

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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PROBLEM (1) Suppose a consumer has just enough money to afford the bundle of 3 apples and 2 oranges, and similarly she also has just enough money to afford the bundle of 2 apples and 4 oranges. (a) Denoting the number of apples with x and oranges with y, plot the two given bundles on a graph, and calculate the relative price of apples; px/ py. (b) If she buys only apples with her budget, how many can she buy? If she buys only oranges, how many can she buy? Write down the budget equation for the consumer. (Notice that knowing two points on the budget line, you can write down the budget equation, even though you weren't given the prices nor the income explicitly!) (c) Suppose MUx = 20 and MUY = 30 at some point on the budget line. Is she maximizing utility by choosing this bundle? If not, should she buy fewer apples (and more oranges), or more apples (and fewer oranges), to increase her utility? (d) Forget about (c); instead, you learn that her utility function is u(x,y) = Axy³. What is…
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…
12. Suppose a cup of coffee at the campus coffee shop is $2.00 and a cup of hot tea is $2.50. Suppose a student's beverage budget is $20 per week. What is the most cups of tea the student could buy? a. b. 10 16 d. 20 c.
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…
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6 Assume that you are a rational person and that you visit a grocery store to buy bananas. Use the marginal benefit and marginal cost (utils) principle, described in Unit 1, to explain how many bananas you will ultimately buy.
13) Suppose a certain change will generate £5,000 of benefits and £3,000 of costs.This change can best be described as(a) a potential Pareto improvement.(b) inefficient.(c) Pareto efficient.(d) equitable.
In the diagram to the right, we have five different combinations of movies and books. Combination A represents 2 movies and 3 books. Combination C represents more books (7) and the same number of movies (2). Points B, E, and F are other combinations with more movies, more books, or more of both. When compared to combination A, combination B provides satisfaction to the consumer. When compared to combination F, combination B provides satisfaction to the consumer. When compared to combination A, combination F provides satisfaction to the consumer. These conclusions are based on what assumption about preferences? Books 10- 9- 8- 7- 6- 4- 3- 2- 1- 0- 0 1 C A 2 3 E 4 5 Movies LL B 6 7 8 9 Next
PROBLEM (4) Zoey has $3 budget in total and can spend her money on cookies (x) and bananas (y).She has preferences over cookies and bananas represented by u(x,y) = x?y. The first 5 cookies are free for Zoey, but each additional cookie costs $1. Bananas are always $1 each. (a) Draw her feasible budget set, identifying all the intercepts, kinks, etc... (b) What is her optimal bundle? (c) What is her optimal bundle if she only had a $2 budget? (d) Suppose she has $2 budget, but now not only the first 5 cookies are free, but also the first 3 bananas (additional cookies or bananas are $1 each as before). Draw her budget set and calculate her optimal bundle.
PROBLEM (1) (Rational Choice) Suppose your friend is about to buy a digital camera. A digital camera is identified with three dimensions; 1) resolution (in megapixels), 2) optical zoom (a real number) and 3) battery life (a number of hours). For example, A = (8, 4, 20) is a camera with 8mp resolution and x4 optical zoom and 20 hours of battery life. When he goes into a store, he faces a menu of cameras. When comparing two cameras if camera A is weakly better than B on at least 2 dimensions, it is weakly preferred to the other; written A ≥preferred B. a) Is this preference relation complete? Transitive? Prove it or show an example where the property doesn't hold. b) Suppose the agent chooses from any menu of cameras, a camera that is (weakly) preferred to all other cameras in the menu. Would this choice function be rational, given (a)? Briefly explain your reasoning.