Microeconomics
10th Edition
ISBN: 9781259655500
Author: David C Colander
Publisher: McGraw-Hill Education
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Question
Chapter 21, Problem 5QE
To determine
One rule of thumb and the violation of rationality assumption.
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Chapter 21 Solutions
Microeconomics
Ch. 21.1 - Prob. 1QCh. 21.1 - Prob. 2QCh. 21.1 - Prob. 3QCh. 21.1 - Prob. 4QCh. 21.1 - Prob. 5QCh. 21.1 - Prob. 6QCh. 21.1 - Prob. 7QCh. 21.1 - Prob. 8QCh. 21.1 - Prob. 9QCh. 21.1 - Prob. 10Q
Ch. 21 - Prob. 1QECh. 21 - Prob. 2QECh. 21 - Prob. 3QECh. 21 - Prob. 4QECh. 21 - Prob. 5QECh. 21 - Prob. 6QECh. 21 - Prob. 7QECh. 21 - Prob. 8QECh. 21 - Prob. 9QECh. 21 - Prob. 10QECh. 21 - Prob. 11QECh. 21 - Prob. 12QECh. 21 - Prob. 13QECh. 21 - Prob. 14QECh. 21 - Prob. 15QECh. 21 - Prob. 16QECh. 21 - Prob. 17QECh. 21 - Prob. 18QECh. 21 - Prob. 19QECh. 21 - Prob. 1QAPCh. 21 - Prob. 2QAPCh. 21 - Prob. 3QAPCh. 21 - Prob. 4QAPCh. 21 - Prob. 5QAPCh. 21 - Prob. 1IPCh. 21 - Prob. 2IPCh. 21 - Prob. 3IPCh. 21 - Prob. 4IPCh. 21 - Prob. 5IPCh. 21 - Prob. 6IP
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- Do you think the model of consumer equilibrium describes how people really make the decisions on what to order to in a restaurant to maximize their utility? Is there a better model to measure consumer choice?arrow_forwardam. 111.arrow_forwardIf the price of restaurant meals is overall higher in big cities then you might expect young people in those cities to spend more on those meals as a percent of their income than similar people in the suburbs. The answer must then lie with the preferences of those young people with their utility curves. Do you think that people reveal their preferences in part by where they choose to live?arrow_forward
- what are some keypoints about behavioral economics?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_forwardTomas buys a hamburger that doesn't taste very good. He can't return the hamburger and get his money back. Tomas decides to eat the hamburger even though it doesn't taste very good because he doesn't want to "lose the money" he paid for the hamburger. Which of the following statements are true about this situation? Check all that apply. Tomas may end up making himself worse off by eating the hamburger than by not eating the hamburger. Tomas cannot get back the money he paid for the hamburger, and so eating the hamburger doesn't really prevent him from losing the money he paid for the hamburger. By deciding to eat the hamburger, Tomas is committing the sunk cost fallacy.arrow_forward
- Why do economists use the ceteris paribus assumption?arrow_forwardWhat would behavioral economics say about each of the following statements? a. “Nobody is truly charitable-people donate money just to show off." b. “America has a ruthless capitalist system. Considerations of fairness are totally ignored." c. “Selfish people always get ahead. It's like nobody even notices!"arrow_forwardWhat does behavioral economics have to say about each of the following statements? a. “Nobody is truly charitable—they just give money to show off.” b. “America has a ruthless capitalist system. Considerations of fairness are totally ignored.” c. “Selfish people always get ahead. It’s like nobody even notices!”arrow_forward
- can i have an explanation for each answer?arrow_forwardQ. 4 Economists suggest that common people consciously equate marginal utility with price as they are shopping for groceries, but I don't think anyone else but economists may do this and I suspect even they slip up. It is ridiculous to describe consumer behavior in terms of a theory that consumers have never even heard of. Humans are not super calculators. Many times people buy things on a whim. For example, I buy chewing gum at the checkout counter and it is not on my original list of items to purchase. Discuss Is the Homo Economicus assumption, that is, humans have the super-cognitive ability, are super-rational, and possess full information of all relevant costs, tradeoffs, budget available, and consequences, a reasonable assumption, or is there some other psychological model of consumer behavior that seem s more reasonable and explain observed human behavior well.arrow_forwardWhen consumers were given the opportunity to select a package of ground beef labeled “75% lean” or a package of ground beef labeled “25% fat,” most consumers chose “75% lean.” Why? What concept from the chapter does this illustrate? The reason is that consumers are swayed by cheap talk. Cheap talk is the concept. The reason is that consumers are much more likely to choose the alternative framed as the positive option. This is called a framing effect. The reason is that consumers infer the value of a product from positive advertising. This is called inference induction. The reason is that consumers respond better to higher numbers. They feel they are getting more because 75 is greater than 25. The concept is the endowment effect.arrow_forward
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