ECON MICRO (with ECON MICRO Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
5th Edition
ISBN: 9781305631946
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 2, Problem 1.1P
To determine
If the thought of finishing an expensive meal even if the appetite is full is right or not.
Concept Introduction:
Sunk cost: The cost which cannot be recovered
Expert Solution & Answer
Explanation of Solution
This example is based on sunk cost.
The person has bought the expensive meal. despite feeling full, he eats the rest to finish it off because he wants to have a full worth of his money. But actually, this is not giving him anysatisfaction. In an economicsense, his utility will decrease with every additional bite he takes. his
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2. A firm’s production function is given by:Q = 10KLThe unit capital and labour costs are 2 and 1 pounds respectively. The firm is contracted to produce2000 units.(a) Write out the optimisation problem of the firm. (b) Express this problem using a Lagrangian function. (c) Find values of K and L which fulfil the contract with minimal cost to the firm. (d) Calculate the total cost to the firm.
Chapter 2 Solutions
ECON MICRO (with ECON MICRO Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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