Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134421315
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 7, Problem 3.3P
To determine
Decision making.
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6) You have been assigned to create a new TV game show, and you have an interesting idea that you call, “I WANT TO BE A MILLIONAIRE.” The basics are: 1) two contestants; 2) the show begins with each contestant being given $1 million (!); and then 3) they begin playing a game that can increase or decrease that $1 million.
You worry that the initial outlay of $2 million will stun your producers, so you decide to prepare them with a simpler version of your game that you call: “I WANT $3.” There are four steps in this simpler game:
There are two contestants/opponents (who do not know each other and cannot communicate with each other during the game).
Each player is given $3 at the start of the game.
Independently and simultaneously, each player must choose whether they want to add $0, $1, $2 or $3 to their initial stake of $3. Doing so reduces their opponent’s award by $0, $2, $4, or $6, respectively.
Each player knows that their payoff at the end of the game is based on their initial…
specialize in producing radios? Compasses?
Problem 2
Gary and Diane must prepare a presentation for their economics class. As part of their presentation, they
must do a series of calculations and prepare 50 PowerPoint slides. It would take Gary 10 hours to do the
required calculation and 10 hours to prepare the slides. It would take Diane 12 hours to do the
calculations and 20 hours to prepare the slides.
How much time would it take the two to complete the project if they divide the
calculations equally and the slides equally?
a.
How much time would it take the two to complete the project if they use comparative
advantage and specialize in calculating or preparing slides?
b.
If Diane and Gary have the same opportunity cost of $5 per hour, is there a better
solution than for each to specialize in calculating or preparing slides? Briefly discuss.
C.
1
West Central State College is making holiday
wreaths to raise money for a homeless shelter.
From past sales experience, it was learned that if
the wreaths are priced at $12 apiece, the college
will sell 32, but if the price is raised to $24, it will
sell only 24. On the other hand, at a price of $12,
the college is willing to make only 26 wreaths,
but at a price of $24, it will make 30. What price
should the college set so that its supply will
equal the demand for the wreaths?
Chapter 7 Solutions
Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
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