Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 2, Problem 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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Students have asked these similar questions
PROBLEM (1) (Rational Choice) Suppose your friend is about to buy a digital camera. A digital camera is
identified with three dimensions; 1) resolution (in megapixels), 2) optical zoom (a real number) and 3) battery
life (a number of hours). For example, A = (8, 4, 20) is a camera with 8mp resolution and x4 optical zoom and 20
hours of battery life. When he goes into a store, he faces a menu of cameras. When comparing two cameras if
camera A is weakly better than B on at least 2 dimensions, it is weakly preferred to the other; written A ≥preferred B.
a) Is this preference relation complete? Transitive? Prove it or show an example where the property doesn't hold.
b) Suppose the agent chooses from any menu of cameras, a camera that is (weakly) preferred to all other cameras
in the menu. Would this choice function be rational, given (a)? Briefly explain your reasoning.
Q5
19
Question 19 options:
The was a consumer sees the product as it compares to other similar products in the market is
Chapter 2 Solutions
Econ Micro (book Only)
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