Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 22, Problem 13QE
To determine
Explain the given statement.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
A recent trend in health insurance is the Health Savings Account (HSA). The idea behind Health Savings Accounts is that rather than providing employees with health insurance that makes visiting doctors cost little more than a simple $10 or $20 copay the employer gives the employee money to use to spend on health care, but the employee bares the entire cost of seeing the doctor. What money given for health care not spent by the employee can be withdrawn by the employee as if it was additional income.
It is believed that Health Savings Accounts will reduce the total amount of money spent on seeing doctors. Using Supply and Demand analysis, explain why there is the expectation that HSA’s will reduce spending on doctors.
Rosa received a corgi pillow as a raffle prize; she would have been willing to pay $18 to buy it herself. Based on the endowment effect, we would expect Rosa to be willing to sell the pillow.
As an investment advisor, you tell a client that an investment in a mutual fund has (over the next year) a higher expected return than an investment in the money market. The client then asks the following questions: a. Does that imply that the mutual fund will certainly yield a higher return than the money market? b. Does it follow that I should invest in the mutual fund rather than in the money market? How would you reply?
Chapter 22 Solutions
Microeconomics
Ch. 22.1 - Prob. 1QCh. 22.1 - Prob. 2QCh. 22.1 - Prob. 3QCh. 22.1 - Prob. 4QCh. 22.1 - Prob. 5QCh. 22.1 - Prob. 6QCh. 22.1 - Prob. 7QCh. 22.1 - Prob. 8QCh. 22.1 - Prob. 9QCh. 22.1 - Prob. 10Q
Ch. 22 - Prob. 1QECh. 22 - Prob. 2QECh. 22 - Prob. 3QECh. 22 - Prob. 4QECh. 22 - Prob. 5QECh. 22 - Prob. 6QECh. 22 - Prob. 7QECh. 22 - Prob. 8QECh. 22 - Prob. 9QECh. 22 - Prob. 10QECh. 22 - Prob. 11QECh. 22 - Prob. 12QECh. 22 - Prob. 13QECh. 22 - Prob. 14QECh. 22 - Prob. 15QECh. 22 - Prob. 16QECh. 22 - Prob. 17QECh. 22 - Prob. 18QECh. 22 - Prob. 19QECh. 22 - Prob. 20QECh. 22 - Prob. 21QECh. 22 - Prob. 22QECh. 22 - Prob. 23QECh. 22 - Prob. 24QECh. 22 - Prob. 25QECh. 22 - Prob. 26QECh. 22 - Prob. 1QAPCh. 22 - Prob. 2QAPCh. 22 - Prob. 3QAPCh. 22 - Prob. 4QAPCh. 22 - Prob. 1IPCh. 22 - Prob. 2IPCh. 22 - Prob. 3IPCh. 22 - Prob. 4IPCh. 22 - Prob. 5IPCh. 22 - Prob. 6IP
Knowledge Booster
Similar questions
- Consider an overtime rule that requires that workers get paid double for any weekly hours over 40. Draw a picture that shows how a worker decides how much to work. Label everything in your picture and explain what is happening. Consider an investment that costs $100 and pays back $10 each year as long as the person making the investment is alive. Construct an equation for the net present value of the investment. An individual has a utility function, U = AX1 X2 where X1 and X2 are consumption of goods 1 and 2. The individual also faces a budget constraint. Show mathematically how an increase in Aa§ects the individualís decisions about consumption of each good.arrow_forwardEvan knows his GPA would skyrocket if he could break his horrible habit of procrastinating. An example of a commitment device Evan could use would be: Question 46 options: a to allow himself one hour of leisure for every half-hour of studying he does each day. b to exercise before studying in order to be refreshed. c to pay a student to meet him each afternoon for 2 hours in the library to ensure he studies every day. d All of these are commitment devices.arrow_forwardJohn is an economist working for Ministry of Tourism in Suva, earning $30,000 per year. There are, say, three alternative careers available for John. He can work for Reserve Bank or Ministry of Economy in Suva for $25,000 and $28,000 per year respectively. Still another alternative is that he can set up his own economic consultancy firm, expecting to make a profit of $27,500 a year for himself. What is John’s opportunity cost of working in Ministry of Tourism?arrow_forward
- This problem considers the decisions of a consumer whose preferences are given by u(C, 1) = C + y log 1, in which is the quantity of consumption and I is the quantity of leisure. The consumer faces two constraints. The time constraint is given by 1 + N = 1 with N³ as the time spent working (or the labor supply). Assume that 0 < x < 1. The main advantage of working is the wages consumers receive. Consumers take wages as given (outside of their control) and obtain wage income equal to w Nº. The budget constraint is C = wN+T-T, with as real dividend income and T as the real lump-sum taxes paid to government. Assume that an interior solution always exists in the optimal consumption-leisure choice.arrow_forwardYou May Be Paid More (or Less) Than You Think It’s so hard to put a price on happiness, isn’t it? But if you’ve ever had to choose between a job you like and a better-paying one that you like less, you probably wished some economist would tell you how much job satisfaction is worth. Trust in management is by far the biggest component to consider. Say you get a new boss and your trust in management goes up a bit (say, up 1 point on a 10-point scale). That’s like getting a 36-percent pay raise. In other words, that increased level of trust will boost your level of overall satisfaction in life by about the same amount as a 36-percent raise would. a. Measure trust in management on a 10-point scale, measure pay on the same 10-point scale, and think of them as two goods. Sketch an indifference curve (with trust on the x -axis) that is consistent with the news clip. b. What is the marginal rate of substitution between trust in management and pay according to this…arrow_forwardCharter Savings, a financial firm, distributes a portion of the profits resulting from improvements in productivity and efficiency among its employees. If the company enjoys an improvement of \\( \\$ 45,000,60 \\) percent of the improvement is the company's share. The other 40 percent is distributed among the employees in the company. What is being exemplified in this scenario?arrow_forward
- Is government participation in our personal retirement plans good or bad? As an employee and employer, we are required to pay a sizeable percentage of our income into a federal retirement/benefits plan OASDI (aka: Social Security). Is this good or bad for our government to require this. Should retirement planning be left to the sole discretion of the working citizen? Provide reasons/examples to support your position.arrow_forwardBack in 2007, William Beeny, the 81-year-old founder of a quirky roadside museum devoted to proving that Elvis Presley is still alive, put the museum's entire collection of Elvis memorabilia up for auction. The collection included photographs, books, yellowed news clippings, and replicas of Elvis' Cadillac. His wish was that the winning bidder would buy the collection and carry on his theory that the King never died. Beeny refused to put a value on his collection. "Value is in the eye of the beholder," he said. "One man's trash is another man's treasure." Suppose four individuals decided to participate in the auction and that their private values of the collection are as follows: Bidder Valuation Dimmy $147,000 Virginia $158,000 Burt $153,000 Hope $150,000 Which of the following statements is correct? O In a first-price sealed-bid auction, Virginia would win the collection but might end up paying more than $158,000 (winner's curse). O In an English Auction, Virginia would win the…arrow_forwardPeter lives for three periods. He is currently considering three alternative educationwork options. He can start working immediately, earning $100,000 in period 1, $110,000 in period 2 (as his work experience leads to higher productivity), and $90,000 in period 3 (as his skills become obsolete and his physical abilities deteriorate). Alternatively, he can spend $50,000 to attend college in period 1 and then earn $180,000 in periods 2 and 3. Finally, he can receive a doctorate degree in period 2 after completing his college education in period 1. This last option will cost him nothing when he is attending graduate school in the second period as his expenses on tuition and books will be covered by a research assistantship. After receiving his doctorate, he will become a professor in a business school and earn $400,000 in period 3. Peter’s discount rate is 20 percent per period. What education path maximizes Peter’s net present value of his lifetime earnings?arrow_forward
- Q1) Peter lives for three periods. He is currently considering three alternative education-work options. He can start working immediately, earning $100,000 in period 1, $110,000 in period 2 (as his work experience leads to higher productivity), and $90,000 in period 3 (as his skills become obsolete and physical abilities deteriorate). Alternatively, he can spend $50,000 to attend college in period 1 and then earn $180,000 in periods 2 and 3. Finally, he can receive a doctorate degree in period 2 after completing his college education in period 1. This last option will cost him nothing when he is attending graduate school in the second period as his expenses on tuition and books will be covered by a research assistantship. After receiving his doctorate, he will become a professor in a business school and earn $400,000 in period 3. Peter’s discount rate is 20 percent per period. What education path maximizes Peter’s net present value of his lifetime earnings? Q2) (a) Is the presence of…arrow_forwardHow does the microeconomic theory of fertility relate to the theory of consumer choice? Do you think that economic incentives and disincentives influence family size decisions? Explain your answer, giving some specific examples of such incentives and disincentives.arrow_forwardWhat sectors of life the loss aversion can be found in? Explain.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
- Economics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub Co
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Economics Today and Tomorrow, Student Edition
Economics
ISBN:9780078747663
Author:McGraw-Hill
Publisher:Glencoe/McGraw-Hill School Pub Co