Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 20, Problem 5QP
To determine
Explain the reason why the owner of a car repair shop in a small town does not overcharge customers than the owner of a car repair shop in a large city.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Freddie sees a watch for sale in the window of a shop with a price tag of $50 attached. Explain whether this is an offer or an invitation to treat
Consumers exercise self interest when
Explain how utility could be used in a decision where performance is not measured by monetary value.
Knowledge Booster
Similar questions
- As we learned in the video, Sheldon is trying to decide between purchasing an XBox and purchasing a PlayStation. Each system has its pros and cons. Sheldon is willing to pay up to $300 for the XBox, which costs $249. He is willing to pay up to $500 for the PlayStation, which costs $499. Regardless of which game system he buys, Sheldon plans to purchase a third-party warranty for $20. Let's calculate Sheldon's opportunity cost of purchasing each system. V 3rd attempt Part 1 What is Sheldon's opportunity cost if he buys the XBox? $ Part 2 What is Sheldon's opportunity cost if he buys the PlayStation? $ See Hint See Hintarrow_forwardCritically discuss whether maximising behaviour or satisficing behaviour is the best way to explain consumer behaviourarrow_forwardImagine you are a bank manager. Currently, your bank holds $8 million in deposits at a 4% interest rate. However, you need to increase the total deposits to $10 million. The interest rate elasticity of savings is 40. What interest rate should you offer to depositors to obtain the required amount, all other things being equal?arrow_forward
- You are selling $30 souvenir books for a club fund-raiser. How could you use the technique of lowballing to improve your sales?a. Start by offering the books at $70 each and pretend to bargain with customers, making $30 your “final offer.”b. Start by selling the books at $25, but once the customer has retrieved his or her checkbook, tell him or her you made a mistake and the books are actually $5 more than you thought.c.Offer the customers additional incentives to buy the book, such as free cookies with every purchase.d. Start by selling the books at $40, but tell the customer he or she will get $10 back in three weeks.arrow_forwardHi, there. I need a clarification of question number 1, which choice is the best answer?arrow_forwardHow should I spend my money in order to maximize my utility?”arrow_forward
- Why would people prefer to pay by credit card and pay 12% interest when they have a savings with a savings account with sufficient funds paying them only 3% This is for behavioral economics mock exam. Thanksarrow_forward1. Jack is considering selling his elliptical machine, which he never really used, is high quality, and has been taking up space in his spare bedroom. He lists it on Facebook Marketplace for "$1,200 or best offer" but in reality won't sell it for less than $1,000. Lina is looking to purchase a used elliptical machine. For a high-quality elliptical, she is willing to pay up to $1,300, and for a low-quality elliptical, she is willing to pay $600. Lina is risk neutral but she cannot tell if the elliptical machine is high quality or low quality. If she believes that 60% of used elliptical machines are high quality and 40% are low quality, what is the maximum price that Lina would be willing to pay? Would Jack agree to this price?arrow_forwardWhat are the principles of Consumption in Muslim Consumer Behaviour?arrow_forward
- Billy's income Is equal to / = 100 and his utility function is U = [?. There is a 10% chance that he will be in an accident next year with his skateboard that will cause $70 worth of damage. Get the risk premium for Billy. b. An Insurance company offers a policy that will cover all the damages if an accident occurs Calculate the fair price for the insurance. %3D a.arrow_forwardSanjay won a poker game against his friends. Now he has to choose between $600 (the winnings) and the chance to play a new game. In this new game, Sanjay has a 50% chance of winning nothing and a 50% chance of winning $1000. The following graph presents the utility function of Sanjay with respect to money: 1. By how much money would his winnings need to increase or decrease so that Sanjay isindifferent between the $600 and the new game? At a different table, Juan wins $800 in a blackjack game. Similarly, he has to choose between $800 or the chance to win a new game. In this game, Juan has a 45% chance of winning nothing and a 55% chance of winning $1000. The following graph presents the utility function of Juan with respect to money: 2. By how much money would his winnings need to increase or decrease so that Juan is indifferent between the $800 and the new game? Please enter a positive number for an increase or a negative number for a decrease.arrow_forwardthe question is asking decrease in consumer confidence, so all things should be the opposite?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
Microeconomics: Principles & PolicyEconomicsISBN:9781337794992Author:William J. Baumol, Alan S. Blinder, John L. SolowPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Microeconomics: Principles & Policy
Economics
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning