EBK PRINCIPLES OF MACROECONOMICS
6th Edition
ISBN: 9780073534701
Author: Frank
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 3P
To determine
Explain the decision of attending the game.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
6) You have been assigned to create a new TV game show, and you have an interesting idea that you call, “I WANT TO BE A MILLIONAIRE.” The basics are: 1) two contestants; 2) the show begins with each contestant being given $1 million (!); and then 3) they begin playing a game that can increase or decrease that $1 million.
You worry that the initial outlay of $2 million will stun your producers, so you decide to prepare them with a simpler version of your game that you call: “I WANT $3.” There are four steps in this simpler game:
There are two contestants/opponents (who do not know each other and cannot communicate with each other during the game).
Each player is given $3 at the start of the game.
Independently and simultaneously, each player must choose whether they want to add $0, $1, $2 or $3 to their initial stake of $3. Doing so reduces their opponent’s award by $0, $2, $4, or $6, respectively.
Each player knows that their payoff at the end of the game is based on their initial…
Use the scenario below to answer the question.
Chocolate raisin protein bars are Duc’s favorite dessert. A local bakery sells them for $1.00 each. Duc buys one and eats it at the bakery. Duc decides that he wants another one, but is not willing to pay full price. He knows the owner of the bakery and wants to negotiate. He offers to buy two more protein bars at $0.75 each. He plans to eat one at the store and anther one later. The bakery owner agrees to the deals.
What is the total utility of Duc’s decision?
00
75
50
00
Imagine that you are at dinner with an acquaintance and that you are each
independently choosing what to order for dinner: a burger (which costs $8), or a chicken
($12). In terms of enjoyment, you each have the same preferences: you value the burger at
$14, chicken at $17. In other words, if you were dining alone and ordered a burger, your
payoff would equal $14- $8 = $6. In this case, however, you will split the bill equally with
your companion and thus your payoff depends both on your own order and the order of your
acquaintance. Specifically, each diner's payoff is equal to the value of their own meal minus
half the cost of the total bill. They also get a payoff of $2 when both of them choose the same
meal.
(a) Write down the normal form representation of the game in which both players are
independently choosing between the actions Burger, Chicken.
(b) What are pure and mixed Nash equilibria? Draw best response graphs according to
beliefs.
Chapter 1 Solutions
EBK PRINCIPLES OF MACROECONOMICS
Knowledge Booster
Similar questions
- Ming lives in Seattle and recently bought a $125 ticket to attend a Seattle Seahawks game. He is a huge fan, so even though the ticket is pricey it is well below his willingness to pay of $250 However, as game day approaches, Ming receives an invitation from his friend, Cassandra, to spend the day at the Museum of Pop Culture touring a big exhibit on Marvel superheroes. The museum visit would only cost $75, but Ming (being a big Marvel fan too) would be willing to pay $150. What is his opportunity cost of going to the Seattle Seahawks game? Ming's total opportunity cost of going to the Seattle Seahawks game is $ (Enter a numeric response using an integer)arrow_forwardCatherine wins a non-transferable, non-refudnable ticket to attend Saturday's baseball game. Taylor plans to attend the same game, but she knows from experience she can purchase a $40 ticket the day of the game. On the day of the game, it is cold with off-and-on rain showers, weather that both Catherine and Taylor equally dislike, making the prospect of attending the game less attractive than before. If both Catherine and Taylor have the same tastes and rational: a. Is one of them more likely to attend the baseball game than the other? b. Instead of winning a ticket, assume that last week Catherine paid $40 for the non-trasnferable, non-refundable ticket to Saturday's game. Would this change whether or not one of them is more likely to attend the baseball game?arrow_forwardAhmed is considering his plans for the coming weekend. He is currently working as a marketing specialist in a big advertising company. He normally spends the weekend with family but this weekend he is thinking of going on a camping trip that would cost him about $1,900. At the same time, his manager asked him whether he can help during the weekend and the company will be willing to pay him an overtime bonus of $1,000. If Ahmed goes on the camping trip, he can manage to provide a number of quick consultancy services that would earn him around $2,500. If Ahmed decided to go on the camping trip what would be the incremental cost of that decision ($)? a. None of the given answerS O b. 1,000 O c. 2,500 O d. 1,900 O e. 600arrow_forward
- Van has plans to go to an opera and already has a $100 nonrefundable, nonexchangeable, and nontransferable ticket. Now Amy, whom Van has wanted to date for a long time, asks him to a party. Van would prefer to go to the party with Amy and forgo the opera, but he doesn't want to waste the $100 he spent on the opera ticket. From the perspective of an economist, if Van decides to go to the party with Amy, what has he just done? 1. Incorrectly allowed a sunk cost to influence his decision 2. Made a choice that was not optimal 3 Correctly ignored a sunk cost Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardLevi offered to sell his car to Evan for $5,000 cash. Evan responded to Levi's offer by saying: "I will buy your car for $ 5,000. I will pay you $2, 500 now, and $2, 500 in one week's time." Have Levi and Evan formed a binding agreement? Explain.arrow_forwardYou work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: penguin pops, flopsicles, and cannies. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of penguin pops decreases by 8%, the quantity of flopsicles sold increases by 6% and the quantity of cannies sold decreases by 8%. Your job is to use the cross-price elasticity between penguin pops and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following table by computing the cross-price elasticity…arrow_forward
- You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: splishy splashies, frizzles, and cannies. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of splishy splashies decreases by 20%, the quantity of frizzles sold decreases by 22% and the quantity of cannies sold increases by 7%. Your job is to use the cross-price elasticity between splishy splashies and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following table by computing the cross-price…arrow_forwardJulia and Ralph need to decide which one of them will take time off from work to complete the rather urgent task of pruning their trees. Julia is pretty good with a pole saw; she can prune the trees in 1 hour. Ralph is somewhat slow; it takes him 6 hours to prune the trees. Julia earns $120 per hour as a business consultant, while Ralph earns $15 per hour as a lifeguard.Keeping in mind that either Julia or Ralph must take time off from work to prune the trees, who has the lowest opportunity cost of completing the task?arrow_forwardConcert Tickets You are selling seats at an upcoming concert. The concert hall has a total of 8,500 seats, which will include reserved seats and general admission seats. You're selling reserved seats for $9 each and general admission seats for $5 each and are trying to decide how many of each kind of seat to offer. You want to make money on the concert, but also want people who can't afford the more expensive seats to come. You estimate your expenses for putting on the concert to be $50,000. You are hoping to make a profit, or at least break even. Assuming that you sell out the concert: a. Determine an equation for your revenue and profit as a function of the number of reserved seats you offer. b. Graph your revenue and profit equations on the same graph. What do you notice about the two functions? What does the slope of the lines represent in this situation? c. Determine how many reserved seats you would need to offer in order to break even. d. Determine how many reserved seats must…arrow_forward
- You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: splishy splashers, flopsicles, and cannies. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of splishy splashers increases by 10%, the quantity of flopsicles sold decreases by 26% and the quantity of cannies sold increases by 14%. Your job is to use the cross-price elasticity between splishy splashers and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following table by computing the…arrow_forwardSuppose that there are three beachfront parcels of land available for sale in Astoria, and six people who would each like to purchase one parcel. Assume that the parcels are essentially identical and that the selling price of each is $745,000. The following table states each person's willingness and ability to purchase a parcel. Willingness and Ability to Purchase (Dollars) Alyssa 720,000 Brian 690,000 Crystal 680,000 Nick 900,000 Rosa 810,000 Tim 770,000 Which of these people will buy one of the three beachfront parcels? Check all that apply. Alyssa Brian Crystal Nick Rosa Tim Assume that the three beachfront parcels are sold to the people you indicated in the previous section. Suppose that a few days after the last of those beachfront parcels is sold, another essentially identical beachfront parcel becomes available for sale at a price of $732,500. This fourth parcel _____________be sold…arrow_forwardQuestion 10 Which of the following startements about network externalities is CORRECT? Air pollution is an example of a network externality. For a good with network externalities, the number of people who are willing to buy a unit of the good is uniquely determined by the price. Network externalities are always positive. The manufacturer of a new good with network externalities might give away a free version of the good. For a good with network externalities, one person's valuation of the good is always increasing in the number of other people using the good.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning