MICROECONOMICS-ACCESS CARD <CUSTOM>
11th Edition
ISBN: 9781266285097
Author: Colander
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 19, Problem 5IP
To determine
The expected decision rule that Wicksteed follows.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
please solve step by step
In economics, we assume that choices are based on desired outcomes. This concept is
known as:
On January 1st, 2022 every economics major at NYU had to choose one of the following two options: (a) take $10 today, (b) forgo $10 today, and get $15 on December 31st, 2022.
Suppose John Doe, chose option (a), and picked up $10 on January 1st.
Use this information to solve for John’s minimum discount rate. (Recall, r is the discount rate and (1 + r) is the discount factor.)
Given the information above, what do we know about the discount rate of Jane Doe if she chose option (b)?
Chapter 19 Solutions
MICROECONOMICS-ACCESS CARD <CUSTOM>
Ch. 19.1 - Prob. 1QCh. 19.1 - Prob. 2QCh. 19.1 - Prob. 3QCh. 19.1 - Prob. 4QCh. 19.1 - Prob. 5QCh. 19.1 - Prob. 6QCh. 19.1 - Prob. 7QCh. 19.1 - Prob. 8QCh. 19.1 - Prob. 9QCh. 19.1 - Prob. 10Q
Ch. 19.A - Prob. 1QECh. 19.A - Prob. 2QECh. 19.A - Prob. 3QECh. 19.A - Prob. 4QECh. 19 - Prob. 1QECh. 19 - Prob. 2QECh. 19 - Prob. 3QECh. 19 - Prob. 4QECh. 19 - Prob. 5QECh. 19 - Prob. 6QECh. 19 - Prob. 7QECh. 19 - Prob. 8QECh. 19 - Prob. 9QECh. 19 - Prob. 10QECh. 19 - Prob. 11QECh. 19 - Prob. 12QECh. 19 - Prob. 13QECh. 19 - Prob. 14QECh. 19 - Prob. 15QECh. 19 - Prob. 16QECh. 19 - Prob. 1QAPCh. 19 - Prob. 2QAPCh. 19 - Prob. 3QAPCh. 19 - Prob. 4QAPCh. 19 - Prob. 5QAPCh. 19 - Prob. 1IPCh. 19 - Prob. 2IPCh. 19 - Prob. 3IPCh. 19 - Prob. 4IPCh. 19 - Prob. 5IPCh. 19 - Prob. 6IPCh. 19 - Prob. 7IPCh. 19 - Prob. 8IPCh. 19 - Prob. 9IPCh. 19 - Prob. 10IP
Knowledge Booster
Similar questions
- Reese thinks peanut butter and chocolate are great when separate, but when they combine they are even more epic. In other words, Reese likes to eat either peanut butter or chocolate, but when he eats them together, he gets additional satisfaction from the combination. His preference over peanut butter (x) and chocolate (y) is represented by the utility function: u(x, y) = xy + x + y Suppose that now Reese loses almost his entire income, so that he is left with only one dollar, i.e. his new income is I0 = 1. If prices are still px = 2, py = 4, what is his new optimal consumption of x and y (Hint: Remember that consumption of both goods must be weakly positive, i.e. x∗ ≥ 0 and y∗ ≥ 0) (a) x∗ = 0.5, y∗ = 0(b) x∗ = 0.25, y∗ = 0(c) x∗ = 0.75, y∗ = 0.25(d) x∗ = 0.75, y∗ = 0(e) x∗ = 0.5, y∗ = 1arrow_forwardSuppose you have two different job offers. The first offer is in LA and pays $8100 per month. The price of food (F) in LA is $2 and the price of housing (H) is $12. The second offer is in San Francisco and pays $9600. Both food and housing are more expensive in SF at PF = 3 and PH = 14 respectively. If your utility function is U (F, H) = F0.3 H0.7 which job offer should you accept please graph your reasioning.arrow_forwardYou have £20 per week to spend, and two possible uses for this money: telephoning friends back home, and drinking coffee. Each hour of phoning costs £2, and each cup of coffee costs £1. Your utility function is U(X,Y) = XY, where X is the hours of phoning you do, and Y the number of cups of coffee you drink. What are your optimal choices? What is the resulting utility level? You can use the standard result on the constrained maximization of such a function, but must state it clearly. Now suppose the price of telephone calls drops to £1 per hour. What are your optimal choices? What is the resulting utility level? How much income per week will enable you to achieve the same quantities at the new prices as the ones you chose before? What income will enable you to attain the same utility as you did before? Comment on your answer in the context of equivalent variation and compensating variation.arrow_forward
- Catherine 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_forwardPeer pressure is an important influence on the behavior of youngsters. For instance, many preteens begin smoking because their friends pressure them into being “cool” by smoking. Using utility theory, how would you explain peer pressure? How would this compare with the explanations provided by behavioral economics and neuroeconomics?arrow_forwardJane receives utility from days spent traveling on vacation domestically (D) and days spent traveling on vacation in a foreign country (F), as given by the utility function U(D,F) = 10DF. In addition, the price of a day spent traveling domestically is $100, the price of a day spent traveling in a foreign country is $400, and Jane’s annual travel budget is $4000. Suppose F is on the horizontal axis and D is on the vertical axis. Jane's marginal rate of substitution between F and D is equal to 10 1 F/D D/Farrow_forward
- E1arrow_forwardThe following five individuals have different utility functions over food (good x) and clothing (good y): 1) u₁(x, y) = 3x²y 2) u₂(x, y) = 2√x + y 3) Uz(x, y) = x0.6y0.4 4) u₁(x, y) = x² + y² 1 5) us(x, y) = x + 3y For each of these people: a) Compute their marginal utilities of good x, MUx = Ju(x,y) MU, = ду du(x,y) ax b) Check whether the property of "more is better" is satisfied for both goods? Explain. [Hint: Check whether marginal utilities are positive assuming positive amounts of good x and good y] ƏMUX əx and marginal utility of good y, c) Does the marginal utility of good x diminish, remain constant, or increase as each of the individuals buys more x? Explain. [Hint: There are 2 ways to do it: 1) visually check what happens to the expression of MUx when x increases (does it decrease, keep constant or decrease?); or 2) take the partial derivative of this marginal utility with respect to x, that is ƏMUx .aMUX ƏMUX If 0, the marginal utility of x is increasing in x] d) Does the…arrow_forwardYou are considering going to a football game. However, the roads are cover in ice due to bad weather. Your ticket was a gift. You derive a value of z from attending the game, and a cost of D for driving on the icy roads. Your utility function is given by: ug(Z) + ui(D) = In(Z - 3) - In(2 - D). In your ultimate wisdom, you calculate that the cost of driving on the icy roads is 1 unit (So, D=1). What is the minimum value you must obtain from attending the game, so that you decide to go? Solution sent me fast ..arrow_forward
- What is the goal of behavioral economics? Group of answer choices To eliminate the consumers’ state of mind from consideration in economic analysis. To shift economic theory from a mathematical base to more of a psychological study. To integrate the insights of psychology into economics to enrich our understanding of decision-making. To study consumer behavior over time rather than behavior in the moment and integrate these insights in economic analysis.arrow_forwardYou have two options for how to spend the afternoon. You can either go see a movie with your roommate or work as a tutor for the Math Department. From experience, you know that going to see a movie gives you $20 worth of enjoyment, and with your student discount, a movie ticket only costs $12. If you spend the afternoon working as a math tutor, you will get paid $45. On a typical day, you wouldn't be willing to spend the afternoon working as a math tutor for less than $35. What is your opportunity cost of seeing a movie this afternoon? Select one: O a. $57 O b. $12 ○ c. $22 ○ d. $8arrow_forwardGranny lives in the Woods and consumes only bread and fruits. One week she falls ill and has to ask her niece, Red, to buy her weekly food. Red lives in the City, where the price of fruit is $ 2 per kilogram and the price of bread is also $ 2 per loaf. Red knows that Granny's utility function is given by U(f, b) = In (f) + 2 In (b) and that Granny has allocated $ 60 of her income for food each week. Heading to Granny's house in the Woods with the food bought from the City in her basket, Red unexpectedly meets the infamous trader B. B. Wolf, which offers to buy or sell food at a price of $ 3per kilogram of fruits, and $ 6per loaf of bread. Show graphically, what is the Red's budget line before meeting with Wolf and the budghet line after meeting with Wolf?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
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc