Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Question
Chapter 15, Problem 15.13P
a)
To determine
To find: Comparison of posted prices with cost, checking its positivity or negativity, and allocation of surplus.
b)
To determine
To find: Example of real world that seems to be priced as in part(a).
c)
To determine
To find:
Whether the deviation is unprofitable or not.
d)
To determine
To find:
Forces leading to an unprofitable deviation.
e)
To determine
To find:
Nash equilibrium and its comparison.
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Indicate whether each of the following examples of behavior is consistent with the utility-maximization framework of traditional economics or is better explained by concepts developed by behavioral economists.
Example
Consistent with the Predictions of Traditional Economic Theory
More Effectively Addressed by Behavioral Economics
There are people who pursue a degree in theater rather than engineering, even though engineering careers are usually much higher-paying.
Some people treat $55 they earn differently from $55 they win in a random drawing.
Some people would pay money to lower the incomes of others.
People at all-you-can-eat restaurants eventually leave, even though they could continue eating for free.
Economics
CHOOSE THE CORRECT ANSWER.
Remember that in the equilibrium prediction of an
ultimatum game, the Proposer will offer the
smallest non-zero amount of money possible.
First-year Commerce students were asked to play an Ultimatum game where a choice had to be made over the division of R100. Offers could only be
made in R10 increments, and the results of the various offers made are reported in the table below.
Amount offered by Proposer
RO
R10
R20
R30
R40
R50
Proportion rejected
100%
60%
50%
30%
10%
0%
What is the equilibrium split of the R100 between the Proposer and the Responder?
O A. Proposer: R50, Responder: R50
O B. Proposer: R10, Responder: R90
O C. Proposer: R90, Responder: R10
O D. Proposer: R60, Responder: R40
O E. Proposer: R40, Responder: R60
In 2018, Spotify was available in many countries around the world. The same year, Spotify offered an attractive deal
available only to students-Spotify Premium, Hulu Limited, and Showtime, all for one monthly payment of $4.99. The fee
is half the amount charged for a standard Spotify Premium account. To qualify for the deal, students must provide their
information, such as name and birthdate, to Spotify and its third-party partner, SheerID. SheerID is a verification service
utilized by companies to confirm various personal attributes and qualifications. In this case, your current student status at a
Title IX school is in a database, which is accessed by SheerID.
a. In making this offer to students, Spotify is
engaging in group pricing, where the market segments are students and nonstudents.
using the hurdle method, getting people to self-identify their willingness to pay by requiring them to overcome one or
more obstacles.
engaging in perfect price discrimination, charging each…
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