You and another shop are deciding whether to keep prices high or keep prices low. Here is the situation, with the amount of utility you will get depending on what you do and what the other shop does. What action would give you the highest utility? a. You would get the most utility if you kept your prices LOW, no matter what the other shop does b. None of these choices are true C. All of these choices are true d. You would get the most utility if you kept your prices HIGH, no matter what the other shop does e. You would get the most utility if you did whatever the other shop did

You and another shop are deciding whether to keep prices high or keep prices low. Here is the situation, with the amount of utility you will get depending on what you do and what the other shop does. What action would give you the highest utility? a. You would get the most utility if you kept your prices LOW, no matter what the other shop does b. None of these choices are true C. All of these choices are true d. You would get the most utility if you kept your prices HIGH, no matter what the other shop does e. You would get the most utility if you did whatever the other shop did

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 3SQP

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Assume you have your car broken down just before the weekend. You value your weekend trip as muchas v and if you have to stay home you get the zero utility. There are two dealerships in your town. Atthe beginning of the day they simultaneously choose a price for repair. Dealers know that when you cometo one of them and observe the price, you can always call to another dealer to make an inquiry about hisprice. The call is costless. The other dealer, however, can be occupied for this day. Assume, this happenswith probability which is a common knowledge (but the dealers do not know whether the other dealer isoccupied or not). Assume zero repair cost for the dealer and find a symmetric equilibrium of the game.
question as image a. If she can visit only one of the stores, which one would she go and what would be her optimal bundle there? Could she afford this very bundle at the other store? (b) If she can freely visit both stores, (buying each commodity from the store where it is cheaper !!) what would be her optimal bundle? What would she buy from each store? (c) Back to (a), how much money would she willing to give up (out of her $720 budget) for the ability to visit both stores rather than only one store? (HINT: After giving up that money, she is left with less money with which optimizing utility with the option of visiting both stores -buying each commodity from the cheaper store- she is able to achieve the same level of utility in the scenario with the original uncut budget but having to choose only one of the stores to shop at)
Each day Paul, who is in third grade, eats lunch at school. He likes only Twinkies (t) and soda (s), andthese provide him a utility ofutility = U (t s) =square root (ts).a. If Twinkies cost $0.10 each and soda costs $0.25 per cup, how should Paul spend the $1 hismother gives him in order to maximize his utility?b. If the school tries to discourage Twinkie consumption by raising the price to $0.40, by howmuch will Paul’s mother have to increase his lunch allowance to provide him with the same levelof utility he received in part (a)?
u work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: splishy splashies, flopsicles, and mookies. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of splishy splashies increases by 4%, the quantity of flopsicles sold increases by 1% and the quantity of mookies sold decreases by 5%. Your job is to use the cross-price elasticity between splishy splashies and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following table by computing the…
Suppose the linear demand curve for shirtsslopes downward and that consumers buy 500 shirts per yearwhen the price is $30 and 1,000 shirts per year when the priceis $25.a. Compared to the prices of $30 and $25, what can you sayabout the marginal valuation that consumers place on the300th shirt, the 700th shirt, and the 1,200th shirt they mightbuy each year?b. With diminishing marginal utility, are consumers derivingany consumer surplus if the price is $25 per shirt? Explain.c. Use a market demand curve to illustrate the change in consumersurplus if the price drops from $30 to $25.
a. A young connoisseur has $600 to spend to build a smallwine cellar. She enjoys two vintages in particular: a 2001French Bordeaux (wF) at $40 per bottle and a less expensive 2005 California varietal wine (wC) priced at $8. Ifher utility is U (wF, wC))=wF2/3 w C1/3 ,then how much of each wine should she purchase?b. When she arrived at the wine store, this young oenologistdiscovered that the price of the French Bordeaux hadfallen to $20 a bottle because of a decrease in the valueof the euro. If the price of the California wine remainsstable at $8 per bottle, how much of each wine shouldour friend purchase to maximize utility under thesealtered conditions?c. Explain why this wine fancier is better off in part (b)than in part (a). How would you put a monetary value onthis utility increase?
Consider a town with a single street of 1 km long with 3,000 people spread uniformly along it. Two stores, 1 and 2, are located at the opposite ends of the street and sell the same product (store 1 is locatedattheleftend).Thecostofwalkingist1 =$6perkmtostore1andt2 =$9perkmtostore2for each consumer. The net utility of a consumer located at point x from buying a product at store 1 is U1(x) = 100 – p1 – t1x, where pi is a price of the product at store i = 1,2. The net utility from buying at store 2 is U2(x) = 100 – p2 – t2(1 – x). The average cost of the product for each store is c = 4. (a) Assume that all consumers buy product from the sellers. Find the demand functions Di(p1,p2) and the profit functions πi(p1,p2) for each store i = 1,2 as functions of prices p1,p2.(b) Find the equilibrium prices.
7. Bob receives utility from days spent traveling on vacation domestically (D) and daysspent traveling in a foreign country (F) as given by the utilityU(D; F) = DFThe price of a day spent traveling domestically is 160 pounds and in a foreigncountry 200 pounds. Bobís annual budget for traveling is 8000 pounds. (a) Find Bobís utility maximising choice of days traveling domestically and of daystravelling in a foreign country. Find also his utility level from consuming thatbundle. Suppose that the price of domestic traveling increases to 250 pounds per day.Denoting his budget for traveling x, (suppose by now that it is unknown) findthe demand for D and F under the new prices as a function of x.
ASAP While we re applying decision rule lets say we come to the point that the Marginal utility per dollar for good A is 4U and for good B is 4U and the price of A is 4 dollar and B is 5 dollar and the our remaining budget is 4 dollar (let say we have 2 good ) then for that situation if we buy good A our total utility remain same ?PLEASE ANSWER JUST MY SCENİRO DONT GİVE GENERAL DEFİNİTİON
image for question a. If she can visit only one of the stores, which one would she go and what would be her optimal bundle there? Could she afford this very bundle at the other store? (b) If she can freely visit both stores, (buying each commodity from the store where it is cheaper !!) what would be her optimal bundle? What would she buy from each store? (c)Back to (a), how much money would she willing to give up (out of her $720 budget) for the ability to visit both stores rather than only one store? (HINT: After giving up that money, she is left with less money with which optimizing utility with the option of visiting both stores -buying each commodity from the cheaper store- she is able to achieve the same level of utility in the scenario with the original uncut budget but having to choose only one of the stores to shop at)
Mylie’s total utility from singing the same song over andover is 50 utils after one repetition, 90 utils after tworepetitions, 70 utils after three repetitions, 20 utils afterfour repetitions, 250 utils after five repetitions, and 2200utils after six repetitions. Write down her marginal utilityfor each repetition. Once Mylie’s total utility beginsto decrease, does each additional singing of the songhurt more than the previous one or less than the previousone?
Suppose that you are thinking about joining COSTCO. You must pay a membership fee, but once you joined you can buy products at a lower price. Assume you would buy only one good, say, paper towels at COSTCO. After careful consideration you think that you are indifferent between joining and not joining COSTCO. Illustrate your dilemma with a graph that includes two budget lines (with or without COSTCO) and an indifference curve. Make sure that you labelled the axes and all the shapes in your graph.