In the diagram to the right, we have five differentcombinations of movies and books. Combination Arepresents 2 movies and 3 books. Combination Crepresents more books (7) and the same number ofmovies (2). Points B, E, and F are other combinations withmore movies, more books, or more of both.When compared to combination A, combination Bprovidessatisfaction to the consumer.When compared to combination F, combination Bprovidessatisfaction to the consumer.When compared to combination A, combination Fprovidessatisfaction to the consumer.These conclusions are based on what assumption aboutpreferences?Books10-9-8-7-6-4-3-2-1-0-01CA23E45MoviesLLB678 9Next

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In the diagram to the right, we have five different combinations of movies and books. Combination A represents 2 movies and 3 books. Combination C represents more books (7) and the same number of movies (2). Points B, E, and F are other combinations with more movies, more books, or more of both. When compared to combination A, combination B satisfaction to the consumer. provides When compared to combination F, combination B provides ▼satisfaction to the consumer. When compared to combination A, combination F provides satisfaction to the consumer. These conclusions are based on what assumption about references? Books 10- 9- 8- 7- 6- 4- 3- 2- 1- 0 1 C A 2 3 E 4 5 Movies F B 6 ート 7

In the diagram to the right, we have five different combinations of movies and books. Combination A represents 2 movies and 3 books. Combination C represents more books (7) and the same number of movies (2). Points B, E, and F are other combinations with more movies, more books, or more of both. When compared to combination A, combination B satisfaction to the consumer. provides When compared to combination F, combination B provides ▼satisfaction to the consumer. When compared to combination A, combination F provides satisfaction to the consumer. These conclusions are based on what assumption about references? Books 10- 9- 8- 7- 6- 4- 3- 2- 1- 0 1 C A 2 3 E 4 5 Movies F B 6 ート 7

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.12P

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Sanjay won a poker game against his friends. Now he has to choose between $600 (the winnings) and the chance to play a new game. In this new game, Sanjay has a 50% chance of winning nothing and a 50% chance of winning $1000. The following graph presents the utility function of Sanjay with respect to money: 1. By how much money would his winnings need to increase or decrease so that Sanjay isindifferent between the $600 and the new game? At a different table, Juan wins $800 in a blackjack game. Similarly, he has to choose between $800 or the chance to win a new game. In this game, Juan has a 45% chance of winning nothing and a 55% chance of winning $1000. The following graph presents the utility function of Juan with respect to money: 2. By how much money would his winnings need to increase or decrease so that Juan is indifferent between the $800 and the new game? Please enter a positive number for an increase or a negative number for a decrease.
How do we measure utility? Are interpersonal (i.e. between people) comparisons valid? Why or why not?
‘‘Risk-averse people should only be averse to big gambles with a lot of money at stake. They should jump on any small gamble that is unfair in their favor.’’ Explain why this statement makes sense. Use a utility of income graph like Figure 4.1 to illustrate the statement. For a challenge, demonstrate the statement using a two-state graph like Figure 4.6.
When 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.
If Ty's marginal utility for a cup of coffee is 20 and his marginal utility of a donut is 10, then A. they should both be purchased. B. coffee should be his next purchase. C. a donut should be his next purchase. D. price information is also needed to determine what Ty should purchase next.
Vilfredo has complete and transitive preferences on cars. We know that he prefers a Hyundai Sonata to a Mazda 3, and that he finds a Mazda 3 at least as good as a Honda Civic. Can we conclude that he prefers a Hyundai Sonata to a Honda Civic? Yes No
True/ false Describe Since a greater utility number indicates that a consumer is better off, utility numbers cannot be negative.
Ann can finish a project either this week or next week. The delayed rewards are 10 in either case. (The project can be done only once or not at all).Next week is busy and the cost of finishing the project are lower this week. The immediate costs are 4 this week and 6 next week. Ann has a quasi-hyperbolic utility withδ= 1 andβ <1. Imagine that Anndoes not finish the project this week. Then she should finish it next week (A) ifβ >0.6; (B) ifβ >0.4; (C) only ifβ= 1; (D) for anyβ.11. Suppose that β= 0.5 and Ann correctly anticipates her choice next week. Then she should finish the project (A) this week; (B) next week; (C) never; (D) not enough information. can you help me with the bolded question? thank you!
Ann can finish a project either this week or next week. The delayed rewards are 10 in either case. (The project can be done only once or not at all).Next week is busy and the cost of finishing the project are lower this week. The immediate costs are 4 this week and 6 next week. Ann has a quasi-hyperbolic utility with δ= 1 and β <1. Imagine that Anndoes not finish the project this week. Then she should finish it next week A) if β >0.6; (B) if β >0.4; (C) only if β= 1; (D) for any β.
Suppose that a consumer has a choicebetween two goods, X and Y. If the price of X is $2 and the priceof Y is $3, how much of X and Y does the consumer purchaseper period, given an income of $17 per period? Use the followinginformation about marginal utility:Units MUX MUY1 10 52 8 43 2 34 2 25 1 2
Mats, who has reference-dependent preferences over beer and money, goes to the local pub with a friend, but is not planning on drinking any beer or spending any of his 50 Euro in cash. Let his end-of-evening outcomes in pints of beer consumed and cash be c1 and c2, respectively, and let his reference point in pints of beer and cash be r1 and r2, respectively. Then, Mats’ utility is given by v(6c1 − 6r1) + v(c2 − r2), where v(x) = x for x ≥ 0, and v(x) = 1.5x for x < 0. (a) Suppose that the price of beer is pB. Calculate Mats’ utility from drinking one pint of beer at this price. What is Mats’ utility from drinking no beer? And, comparing these two utility values, what is the maximum price pB that Mats would pay for one beer? (b) Suppose that Mats unexpectedly gets a pint of beer as part of a promotion at the pub, and incorporates its consumption into his reference point in beer. [Hint: this means that (r1, r2) = (1, 50).] Suppose that Mats could sell the beer at a price pS.…
Bob's utility function implies O time stationarity O transitivity O impatience O all of the above I need help with the questions