Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 12, Problem 2.6P
To determine
Comparing the two options, based on equity and efficiency.
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Students have asked these similar questions
What is the term for the economic principle
that individuals try to get the greatest
benefit from a given resource?
A) Opportunity Cost
B) Marginal Utility
C) Supply and Demand
D) Rational Choice Theory
1. Road construction is going on Riccarton Road. 100 Uber drivers want to drop their passengers at the
airport. Each driver is deciding whether to take Riccarton Road or take Blenheim Road. The cost of
travelling through Riccarton Road is $10 (additional fuel required due to slow traffic), while the Blenheim
Road route has a low fuel cost (theoretically let's assume $0) but takes more time to reach the airport. In
deciding on a route, each driver cares only about income, denoted i, and his travel time, denoted t (where
we have made the dollar value of one unit of travel time equal to 1). Driver's payoff is assumed to be his/
her profit (income - cost of travelling, including travel time). Assume that each driver has same income of
$500. If m drivers are on Riccarton Road, the travel time for a driver on Riccarton Road is assumed to be
m (in dollars). In contrast, if m drivers take Blenheim Road, the travel time for those on the Blenheim
Road is 2m (again, in dollars). Drivers make…
Walter, Yvonne, Tyler, and Phoebe are college roommates. They're trying to decide where the four of them should go for spring break: Vail or Daytona
Beach. If they order the tickets by 10:00 PM on February 1, the cost will be just $500 per person. If they miss that deadline, the cost rises to $1,200
per person.
The following table shows the benefit (in dollar terms) that each roommate would get from the two trips.
Roommate
Walter
Yvonne
Tyler
Phoebe
Benefit from Vail
$1,250
$800
$650
$600
Benefit from Daytona Beach
The roommates tend to put off making decisions. So, when February 1 rolls around and they still haven't made a decision, they schedule a vote for
9:00 PM that night. In case of a tie, they will flip a coin between the two vacation destinations.
The roommates will get the most total benefit if they choose to go to
Roommate
Walter
Yvonne
Tyler
Phoebe
$550
$800
$850
$1,050
Given the individual benefits each roommate receives from the two trips, which trip will each roommate…
Chapter 12 Solutions
Principles of Economics (12th Edition)
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