Q: Total utility is 0 when marginal utility is 0 True/False
A: # Utility is a concept which helps us calculate the satisfaction a consumer gets when a good or…
Q: Using the chart below, what is the marginal utility of consuming the third slice of pizza. Slices of…
A: wants satisfying power known as utility , total utility refers that when you consume all commodity…
Q: On Sunday afternoon, you have arrived for brunch, where you can choose from only two types of…
A: Marginal Utility is the quantity a consumer wants to consume and this utility keeps on decreasing…
Q: Show how the budget constraint affects utility maximization.
A: Answer: Introduction: A consumer maximizes his/her utility by choosing the bundle of goods that…
Q: Suppose Pizza (P) and Hamburgers (H) are perfect substitutes to Kate. Two slices of Pizza always…
A: Given Pizza (P) and Hamburgers (H) are perfect substitute and utility from 2 slices of Pizza =…
Q: Rick thinks either Morty or Summer broke his TV. Morty and Summer each have to decide simultaneously…
A: Hi, thank you for the question. As per our Honor code, we are allowed to attempt only first three…
Q: Explain how revealed preferences indicate which goods or activities give aperson the most utility.
A: The Revealed preference theory was introduced by professor Paul A. Samuelson. This theory explains…
Q: Praxilla, who lived in ancient Greece, derives utility from reading poems and from eating cucumbers.…
A:
Q: The law of diminishing marginal utility is consistent with the fact that people trade. Do you agree…
A: In economics, various laws and theories are developed to understand the market behavior in different…
Q: What is cardinal utility theory?
A: Utility is a term referring to the overall satisfaction obtained from consuming a good or service.
Q: Mary has the utility function u(x, y) = Inx + x^2. Are her preferences strongly convex?
A: u (x,y) = ln x +x2
Q: Rick thinks either Morty or Summer broke his TV. Morty and Summer each have to decide simultaneously…
A: "Since you have asked a question with multiple sub-parts, we will solve the first three sub-parts…
Q: ighted twice as heavily as the 1st, what would your indifference curves between the two homework…
A: A utility perform might be a numerical connection that positions heaps of utilization stock by task…
Q: Using a graph, draw a set of indifference curves that are not locally non- satiated. Explain in…
A: An indifference curve refers to a graphical depiction of a combined product that offers a buyer a…
Q: The law of explains why people and societies rarely make all-or-nothing choices. diminishing…
A: (A)
Q: The marginal utility for the third unit of X is 60 utils, and the marginal utility for the fourth…
A: The law of diminishing marginal utility states that as consumer consumes more and more of a good,…
Q: According to behavioral economics research, in which of the following cases would we expect a person…
A: Behavioral economics refers to the studies of the effects of psychological, emotional, cultural,…
Q: When marginal utility is positive, total utility____
A: Marginal utility is the additional utility derived from having an additional unit of commodity.…
Q: Which of the following are directly related to the principle of diminishing marginal utility?…
A: The Law of Diminishing Marginal Utility states that the marginal utility from each additional unit…
Q: What does revealed preference theory based on? a) Utility and demand b) Observed consumer behavior…
A: Revealed preference: Revealed preference is a theory relating to somebody's consumption patterns,…
Q: explain the cunsumer equilibrium condition according to utility theory. include in your answer the…
A: When talking about consumer equilibrium, it can be said that it is the situation when a rational…
Q: An old nursery rhyme tells us : Jack Sprat would eat no fat; his wife would eat no lean. This tells…
A: Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: The marginal utility of the 8th can of beer is
A: In economics, marginal utility refers to the additional satisfaction or benefit (utility) a buyer…
Q: Suppose marginal utility of good X is 20 while its price is Rs. 4 per unit and marginal utility of Y…
A: (Q) Suppose the marginal utility of good X is 20 while its price is Rs. 4 per unit and the marginal…
Q: Rick thinks either Morty or Summer broke his TV. Morty and Summer each have to decide simultaneously…
A: This is a simultaneous move game with two players. Here they both have to choose their strategies at…
Q: Consider an agent whose preferences over any couple (r1, 22), where r1 E R4 and r2 E R+, e.g.,…
A: Answer -
Q: Bridget's preferences for apples( X) and bananas(Y) can be represented by the utility function…
A: Utility refers to the satisfaction obtained by the consumers from a good or service. While ,…
Q: The concept of diminishing marginal utility with the help of necessary tables and graphs taking a…
A: In economics, utility refers to the entire pleasure derived from the consumption of an item or…
Q: Troy is a utility maximizer. Describe the utility maximization condition. Using the available…
A: Laptop Cost = 750 Drones Cost = 2000 Income = 15,000
Q: Why is “consumer's utility is impossible to measure and quantify? Explain your answer.
A: In economics, utility refers to the entire pleasure derived from the consumption of an item or…
Q: If marginal utility is less than the price, the consumer will
A: Marginal utility: It is the satisfaction that a consumer gets from having one more unit of a good or…
Q: If a good is free, when will a consumer stop wanting to buy the good? Once the total utility equals…
A: ''Since multiple questions are asked, we are supposed to answer one question'' Marginal Utility is…
Q: Suppose Jack is currently consuming nine movies and nine concerts per month. It his utility function…
A: GIVEN Suppose Jack is currently consuming nine movies and nine concerts per month. If his utility…
Q: Check if the following utility functions represent the same preferences: u = x+y, v = x3 + y3, w =…
A:
Q: Suppose that Biff enters a hot dog eating contest. He enjoys hot dogs, so he gladly pays the $20…
A: The optimal choices made by the consumer depend on the possibilities and preferences of the…
Q: Suppose you had a budget of $20.00 and the prices of a burger and a slice of pizza are $4.00 and…
A:
Q: Suppose some friends of Ali call to say they are having a party tonight. Ali calculates that the…
A: Total utility refers to the satisfaction an individual gets from consuming specific units of goods…
Q: Supreme Court Justice Bret Kavanaugh likes beer. The first beer he drinks yields 20 utils; the…
A: Answer: option a (all of these) Explanation: Quantity of beer Marginal utility Total utility 1…
Q: A date with Alex costs you $100 and gives you an additional 1000 units of utility. A date with Kelly…
A: Cost of date with Alex = $100 Utility from Alex date = 1000 Cost of date with Kelly = $200 Utility…
Q: This is in accordance with the principle of diminishing marginal utility. Which of the following are…
A: "Since you have asked a question with multiple sub-parts, we will solve the first three sub-parts…
Q: The Law of Diminishing Marginal Utility is just a theory that has no application to everyday life.…
A: Utility: It means the total satisfaction received from the consumption of goods and services.
Q: What is the axiom of consumer choice that implies that consumers spend all their income in order to…
A: The axiom of consumer choice that implies that consumers spend all their income in order to maximize…
Q: d) Cardinal Utility (Discuss why this is rarely used) e) Monotonic Transformation (example below) f)…
A: d. Cardial utility is the concept of giving numerical values to ones utility. For example, utility…
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- Utility functions incorporate a decision maker’s attitude towards risk. Let’s assume that the following utilities were assessed for Danica Wary. x u(x) -$2,000 0 -$500 62 $0 75 $400 80 $5,000 100 Would a risk neutral decision maker be willing to take the following deal: 30% chance of winning $5,000, 40% chance of winning $400 and a 30% chance of losing $2,000? Using the utilities given in the table above, determine whether Danica would be willing to take the deal described in part a? Is Danica risk averse or is she a risk taker? What is her risk premium for this deal?A manager is deciding whether to build a small or a large facility. Much depends on the future demand that thefacility must serve, and demand may be small or large. The manager knows with certainty the payoffs that willresult under each alternative, shown in the following payoff table. The payoffs (in $000) are the present values offuture revenues minus costs for each alternative in each event.What is the best choice if future demand will be low?8) Three decision makers have assessed utilities for the problem whose payoff table appearsbelow. probabilities and payoffs. S1 S2 S3 D1 500 100 -400 D2 200 150 100 D3 -100 200 300 Probability .2 .6 .2 Indifference Probability for Person Payoff A B C 300 .95 .68 .45200 .94 .64 .32150 .91 .62 .28100 .89…
- Utility Theory You live in an area that has a possibility of incurring a massive earthquake, so you are considering buyingearthquake insurance on your home at an annual cost of $180. The probability of an earthquake damagingyour home during one year is 0.001. If this happens, you estimate that the cost of the damage (fully coveredby earthquake insurance) will be $160,000. Your total assets (including your home) are worth $250,000. A. Apply Bayes’ decision rule to determine which alternative (take the insurance or not) maximizes yourexpected assets after one year.Suppose that a decision maker faced with four decisions alternatives and four state of nature developing the following profit payoff table: Outcomes Alternatives S1 S2 S3 S4 A1 14 9 10 5 A2 11 10 8 7 A3 9 10 10 11 A4 8 10 11 13 Use Maximax, Maximin, Criterion of realism (? = 0.55, and ? = 0.4), Laplace, and Minimax regret to find the best alternative.Roger's utility/u as a function of wealth/w is u = { ln w, w < 1600 w1/2, w >= 1600 Roger has $1000 and 3 options. 1. spend $400 to enter the game with probabilities of winning or losing: Win/(Lose) (500) 0 1000 3000 P(Win/(Lose)) 0.2 0.1 0.6 0.1 a. Show with workings which option roger would choose.
- Choice under uncertainty. Consider a coin-toss game in which the player gets $30 if they win, and $5 if they lose. The probability of winning is 50%. (a) Alan is (just) willing to pay $15 to play this game. What is Alan’s attitude to risk? Show your work. (b) Assume a market with many identical Alans, who are all forced to pay $15 to play this coin-toss game. An insurer offers an insurance policy to protect the Alans from the risk. What would be the fair (zero profit) premium on this policy? can you help me for par (b) plase?Choice under uncertainty. Consider a coin-toss game in which the player gets $30 if they win, and $5 if they lose. The probability of winning is 50%. (a) Alan is (just) willing to pay $15 to play this game. What is Alan’s attitude to risk? Show your work.(b) Assume a market with many identical Alans, who are all forced to pay $15 to play this coin-toss game. An insurer offers an insurance policy to protect the Alans from the risk. What would be the fair (zero profit) premium on this policy? i need help with question B please.A risk-neutral plaintiff in a lawsuit must decide whether to settle a claim or go to trial. The defendants offer $50,000 to settle now. If the plaintiff does not settle, the plaintiff believes that the probability of winning at trial is 50% if the plaintiff wins, the amount awarded to the plaintiff is X Will the plaintif settle if x is $62,500? What if X-$250,000? What is the critical value of X that would make the plaintiff indifferent between setting and going to trial? it the plaintiff were risk averse instead of risk neutral, would this critical value of X be higher or lower? If the amount to be awarded at trial with a win (X) were $62,500, then the plaintiff would settle If the amount to be awarded at trial with a win (X) were $250,000, then the plaintiff would not settle The critical value of X that would make the plaintiff indifferent between settling and going to trial is $ (Enter your response using rounded to wo decimal places)
- You're a contestant on a TV game show. In the final round of the game, if contestants answer a question correctly, they will increase their current winnings of $1 million to $3 million. If they are wrong, their prize is decreased to $750,000. You believe you have a 25% chance of answering the question correctly. Ignoring your current winnings, your expected payoff from playing the final round of the game show is [$ blank]. Given that this is positive [blank (positive/negative)], you should [blank (should/should not)] play the final round of the game. (Hint: Enter a negative sign if the expected payoff is negative.) The lowest probability of a correct guess that would make the guessing in the final round profitable (in expected value) is [blank]. (Hint: At what probability does playing the final round yield an expected value of zero?)6) For the payoff table below, the decision maker will use P(s1) = .15, P(s2) = .5, and P(s3) =.35. S1 S2 S3 D1 -5000 1000 10,000 D2 -15,000 -2000 40,000 What alternative would be chosen according to expected value?b. For a lottery having a payoff of 40,000 with probability p and -15,000 withprobability (1-p), the decision maker expressed the following indifferenceprobabilities. Payoff Probability10,000 .851000 .60-2000 .53-5000 .50 Let U(40,000) = 10 and U(-15,000) = 0 and find the utility value for each payoff. c. What alternative would be chosen according to expected utility?The next few questions refer to this information: Chez Paul is contemplating either opening another restaurant or expanding its existing location. The payoff table for these two decisions is: States of Nature s1 s2 s3 New Restaurant -$80,000 $20,000 $160,000 Expand -$40,000 $20,000 $100,000 Paul has calculated the indifference probability for the lottery having a payoff of $160,000 with probability p and -$80,000 with probability (1-p) with the following sure amounts as follows: Amount Indifference Probability (p) -$40,000 0.4 $20,000 0.7 $100,000 0.9 Is Paul a risk avoider, a risk taker, or risk neutral? Why?