Chapter 11, Problem 1DQ

Please provide an explanation as to why each choices is either correct or wrong.

When two individuals enter an exchange, you can be sure that one person benefits and that the other person loses. Do you agree or disagree with this statement? Explain your answer.

social preferences are not really preferences, and unselfish behavior is really motivated by the desire to follow rules and conventions with respect to what is fair. Is this interpretation correct?

A medical researcher is trying to cure a disease. For each unit of effort she puts into her work, she generates a utility benefit of 10 for each member of society. There are 1,000 people in society besides the medical researcher. The medical researcher doesn’t care about other people. She is in it for the glory. For each unit of effort she puts into her work, she gets a utility benefit of 1000 (which is inclusive of the 10 that she gets for being a member of society, plus a payoff of 990 in glory). If she exerts effort e, she also suffers cost e^2. (a) The medical researcher’s payoff from exerting effort e is 1000e − e^2. What level of effort, e∗, will she exert? (b) Suppose a policymaker who was a committed utilitarian (including caring about the medical researcher’s glory, since the medical researcher cares about it) was to choose the level of effort the medical researcher exerts. That policymaker would add up the total utility in society (including the medical researcher’s utility)…

A medical researcher is trying to cure a disease. For each unit of effort she puts into her work, she generates a utility benefit of 10 for each member of society. There are 1,000 people in society besides the medical researcher. The medical researcher doesn’t care about other people. She is in it for the glory. For each unit of effort she puts into her work, she gets a utility benefit of 1000 (which is inclusive of the 10 that she gets for being a member of society, plus a payoff of 990 in glory). If she exerts effort e, she also suffers cost e^2. (a) Suppose a policymaker who was a committed utilitarian (including caring about the medical researcher’s glory, since the medical researcher cares about it) was to choose the level of effort the medical researcher exerts. That policymaker would add up the total utility in society (including the medical researcher’s utility) from any given level of effort and choose the level of effort that maximizes that aggregate utility. i. What (social)…

Economists describe a choice as: Group of answer choices A. a tradeoff B. human C. limited resource D. None of the above.

Public Good Contribution: Three players live in a town, and each can choose to contribute to fund a streetlamp. The value of having the streetlamp is 3 for each player, and the value of not having it is 0. The mayor asks each player to contribute either 1 or nothing. Each player makes a decision without knowing others’ contributions. If at least two players contribute then the lamp will be erected. If one player or no players contribute then the lamp will not be erected, in which case any person who contributed will not get his money back. Write down the strategy sets of each player, their payoffs, and find all pure-strategy Nash equilibria.

Catherine wins a non-transferable, non-refudnable ticket to attend Saturday's baseball game. Taylor plans to attend the same game, but she knows from experience she can purchase a $40 ticket the day of the game. On the day of the game, it is cold with off-and-on rain showers, weather that both Catherine and Taylor equally dislike, making the prospect of attending the game less attractive than before. If both Catherine and Taylor have the same tastes and rational:  a. Is one of them more likely to attend the baseball game than the other? b. Instead of winning a ticket, assume that last week Catherine paid $40 for the non-trasnferable, non-refundable ticket to Saturday's game. Would this change whether or not one of them is more likely to attend the baseball game?

Suppose that following graduation you have four job offers. Job 1 is in Spokane Washington, and pays a salary of $50,000 per year, Job 2 is in San Jose California and pays $60,000 per year, Job 3 is in Raleigh NC and pays $45,000 per year, Job 4 is in Sarasota Florida and pays $40,000 per year. If you choose job 4, what is the opportunity cost of this decision? Group of answer choices The full (combined) value of the other three jobs, including salary, benefits and living in those cities. The full value of Job 1, since this is the highest paying alternative. The full value of whichever job would have been your second choice.  Zero. $20,000, because this is the difference between the salary you chose and the maximum salary that you gave up.