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Distinguish between the following concepts:
III.
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- Which concept refers to the tendency of individuals to overvalue the utility of an item they already possess compared to an identical item they do not possess? A. Diminishing marginal utility B. Marginal cost C. Sunk cost fallacy D. Endowment effectCreate a situation where you select one of two different items, both are WANTS. Describe the item’s advantage for the one you choose and state the opportunity cost.What is the importance of scale of preference
- Apply the various principles of choice (dominance, Laplace, Minimax, Hurwicz, and Minimax Regret) to the following matrix. The numbers in the matrix are costs.Define Willingness to sell?In a sealed-bid, second-price auction with complete information, the winner is the bidder who submits the second-highest price, but pays the price submitted by the highest bidder. Do you agree? Explain.
- In this week’s discussion we focus on consumer decision-making based on utility theory, opportunity costs, and economic profits. (a) Two economists are attending a conference in an unfamiliar city. At the end of the day, Economist A states she is “in the mood for a high-quality dinner” and after narrowing her search to two fine-dining establishments located on the same block, she ultimately selects the restaurant with the higher prices (assuming cost is not an issue for either economist). Economist B chooses to go to a one-price all-you-can-eat buffet. Using economic theory how would you explain the difference in way Economist A goes about maximizing her utility to Economist B? Next year when they both return to the economics conference in the same city, which of the two restaurants do you think has a higher chance of not being there anymore and why? (one paragraph) (b) Your mother owns and runs an arts and craft store, and the business is doing well. She would have otherwise been…In many cases, it is reasonable to refer to the ________________ as the price Group of answer choices budget constraint sunk cost opportunity cost marginal utilityConsider the following utility function U(X,Y) = 2X + 3Y PX,PY, and I are exogenous. (a) What is the demand function for X? (b) What is the demand function for Y?
- State the law of increasing opportunity cost and use it, in not more than TWO sentences, to explain why the supply curve is upward sloping.Concept: Endowment Effect Behavioral economists attribute some consumer behavior to the endowment effect. Which of the following is an example of the endowment effect? An example of the endowment effect is A. being unwilling to sell a house for a price that is greater than the price you would be willing to pay to buy the house if you didn't already own it. B. taking into account nonmonetary opportunity costs such as the value of your time. C. buying lottery tickets with an expected value that is less than their price. D. being willing to will your descendents a painting upon your death that you otherwise could have sold for a substantial price. E. being unwilling to sell a vase that you already own.Examples of form utility?
