MICROECONOMICS-W/ACCESS
2nd Edition
ISBN: 9780077716318
Author: BERNHEIM
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 7DQ
To determine
Identify the natural experiment.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose that Timmy lives in a neighborhood where graffiti is common. People's cars and the sides of houses are often
vandalized with graffiti
In response to the vandalism, the people in the neighborhood have proposed a voluntary community fund to pay for extra
police patrols. There are 1000 people in Timmy's neighborhood, and each is recommended to contribute $10 a month
Timmy's car has recently been vandalized and he is concerned it may happen again. Although he believes that he will benefit
from the extra police patrols, Timmy has decided to take a free-rider approach
Given his thinking, how much will Timmy contribute to the fund?
Timmy's contribution: $
Assume that the entire neighborhood has the same mentality as Timmy. What will occur?
The rate of graffiti in the neighborhood will increase significantly
Everyone will contribute money towards the community fund, yielding higher rates of police patrol and less graffiti
No one will contribute to the community fund, resulting in no…
Please answer fast please help arjent
Homer consumes only donuts and beer. When he consumes less than 10 beers, Homer would gladly drink one more. After drinking 10 beers, Homer is so drunk that he does not notice any additional bottle he drinks (that is, the benefit of an additional bottle of beer is zero). Drinking more than 17 beers is beyond the processing capability of Homer's liver and any additional bottle makes him sick (beer is no longer a "good" for Homer). Homer's preferences for donuts are similar. As long as he eats less than 15 donuts, an additional donut increases his utility. If he eats between 15 and 20 donuts, then additional donuts do not bring him any additional utility, and if he eats more than 20 donuts, then additional donuts make him worse off. 1. Sketch Homer's indifference curve passing through point (8 donuts, 8 beers). 2. Sketch Homer's indifference curve passing through point (16 donuts, 16 beers)
Knowledge Booster
Similar questions
- Suppose that you have data at the individual level that includes information on the price of a doctor visit an individual and the number of doctor visits they go to in a given year. For simplicity, let's say that those with more generous plans pay less for a doctor's visit, while those with less generous plans pay more for a visit. You graph the relationship between the price individual pays for doctor visits against the number of visits, and you see a downward sloping line; let's call this "measured demand." The problem of "endogeneity" discussed this week could arise here if individuals who know they go to the doctor frequently buy more generous coverage while those who know they rarely go to the doctor purchase less generous coverage. This would imply that the "true" demand curve (if we were to account for endogeneity) is_________ the same as. less inelastic than the measured demand curve. more inelastic than the measured demand curve.arrow_forwardSuppose that you have data at the individual level that includes information on the price of a doctor visit an individual and the number of doctor visits they go to in a given year. For simplicity, let's say that those with more generous plans pay less for a doctor's visit, while those with less generous plans pay more for a visit. You graph the relationship between the price individual pays for doctor visits against the number of visits, and you see a downward sloping line; let's call this "measured demand." The problem of "endogeneity" discussed this week could arise here if individuals who know they go to the doctor frequently buy_ generous coverage while those who know they rarely go to the generous coverage. This would imply that the "measured" demand curve is doctor purchase. more elastic than the "true" demand curve. more; less more; more less; less less; morearrow_forward16.12. Two consumers, Ron and David, together own 1,000 baseball cards and 5,000 Pokémon cards. Let xR denote the quantity of baseball cards owned by Ron and yR denote the quantity of Pokémon cards owned by Ron. Similarly, let xD denote the quantity of baseball cards owned by David and yD denote the quantity of Pokémon cards owned by David. Suppose, further, that for Ron, MRSRxy = yR/xXR, while for David, MRSPxy = yD/2xD. Finally, suppose xR = 800, yR = 800, xD = 200, and yD = 4,200. a) Draw an Edgeworth box that shows the set of feasible allocations in this simple economy. b) Show that the current allocation of cards is not economically efficient. c) Identify a trade of cards between David and Ron that makes both better off. (Note: There are many possible answers to this problem.)arrow_forward
- 5. “The RAND Health Insurance Study gave every subject a fixed amount of money that covered the maximum possible expenditure that each subject might have. Because of this, all participants could act as if they had full coverage, and the experiment was invalid.” Assuming the validity of the first sentence, comment on the inference drawn in the second sentence.arrow_forwardWhy does the ceteris paribus assumption allow economists to focus on the variable they are interested in? Give an example.arrow_forwardA recent trend in health insurance is the Health Savings Account (HSA). The idea behind Health Savings Accounts is that rather than providing employees with health insurance that makes visiting doctors cost little more than a simple $10 or $20 copay the employer gives the employee money to use to spend on health care, but the employee bares the entire cost of seeing the doctor. What money given for health care not spent by the employee can be withdrawn by the employee as if it was additional income. It is believed that Health Savings Accounts will reduce the total amount of money spent on seeing doctors. Using Supply and Demand analysis, explain why there is the expectation that HSA’s will reduce spending on doctors.arrow_forward
- How should individuals in society respond to government-imposed vaccinations?arrow_forwardAfter a long public discussion about goods and services that should be provided to the population, the government decides that a certain scarce good should be provided to anyone who wants it at no cost. As part of this effort, the government sets a price of zero for that good and passes a law making it illegal to transact the good at any price. However, people can give the good away. Assuming that this good is highly desirable for segments of the population, what do you think the effect of this law will most likely have on the market? What would happen if this particular law was removed after being implemented?arrow_forwardThe "useful" are hypothetical units of measurement with which we suppose it can be measure the “satisfaction” that a consumer can derive from consuming a good or service. The amount of utility (satisfaction) that the consumer can derive from consuming a good or service remains constant, no matter how much we consume. "Utility" is something we can measure objectively and is the same for all beings humans. Likewise, we can know in advance the usefulness of a good before consume it. An “indifference” curve represents the combination of two goods that we would want consume, regardless of disposable income or their price. A consumer is in "equilibrium" when his indifference curve is tangent (touches) his budget line. Truth or false and whyarrow_forward
- For many years, states levy a special sales tax on wine often called a "sin tax". The reasoning behind these special sales taxes is that wine consumption can lead to particular social costs such as drunk driving, violence, etc. However, many medical studies have demonstrated that moderate consumption of red wine can lower the risks for many diseases such as coronary heart disease. Thus, there are social benefits as well. Suppose that states, in recognition of some of the benefits to wine consumption, decide to decrease the sales tax on Oregon Pinot Noir. What effect will this have on consumer surplus, producer surplus, and deadweight loss. Consumer surplus increases, producer surplus increases, and deadweight loss increases. Consumer surplus decreases, producer surplus decreases, and deadweight loss decreases. Consumer surplus decreases, producer surplus increases, and deadweight loss is unchanged. Consumer surplus increases, producer surplus increases, and deadweight loss decreases.arrow_forwardParagraph Styles Trigleater is a hungry individual in the Grossman model deciding what to have for dinner is looking at variable options. Trigleater has a special condition called "Eaterblood" where whatever she eats will affect her health almost immediately. The following table reflects the options she is considering and the effect on health Meal Home Good Z Health H Steak and eggs +9 -4 Kale salad and broccoli -5 +18 Double cheeseburger deluxe with coke If Trigleater's single period utility function is given by U-5Z+2H and she can only select one item from the table above. 12 -18 Allpositive is a new promising pharmaceutical company came with a new supplement "Bestofboth" that will halve the negative health effect and at the same time double the positive health effects. What would be the optimal selection if she takes Bestofboth supplement and what would be the maximum utility Kale salad with broccoli max utility = 47 Double Cheeseburger deluxe with coke max utility = 102 Steak and…arrow_forwardYou want to make a model showing how people decide to decorate their houses and lawns. You assume that homeowners follow the art idea of the "Golden Ratio" to decide where one item should be in relation to another. In reality, the homeowners have never heard of the "Golden Ratio," but the predictions made by your model are still very close to how things end up decorated. An economist would say your model O is not ideal due to the lack of realism O is effective as long as the homeowners learn to use the Golden Ratio in decorating as a result of your study is effective because economics focuses on predictions from models, not the assumptions used to create them O is not ideal because it does not look sufficiently like the real worldarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub Co
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics Today and Tomorrow, Student Edition
Economics
ISBN:9780078747663
Author:McGraw-Hill
Publisher:Glencoe/McGraw-Hill School Pub Co
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning