EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Chapter 16, Problem 13SP
To determine
Explain the situation with diminishing
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Consumers choice theory assumes that consumer are rational but we observe a person behaving differently in apparently similar situations. Is it realistic to think that we account for rational behaviour in every situation?
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What part of utility theory would be classified as an abnormality in Thomas Kuhn's view?
Chapter 16 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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- Emily is considering a move from Galway to London. She only consumes food and clothing and the table contains information about her consumption levels in Galway, the prices of food and clothing in Galway and London, and her income in both cities. Her consumption of food and clothing are the only factors that affect her utility. Why does rational choice theory predict that Emily will move to London? Explain clearly. What bias in human behaviour explains why behavioural economics predicts that Emily may stay in Galway? Explain clearly. Price of Food in Galway €4 Price of Food in London €2 Quantity of food consumed in Galway 10 Quantity of food consumed in London n.a. Price of Clothing in Galway €2 Price of Clothing in London €5 Quantity of clothing consumed in Galway 20 Quantity of clothing consumed in London n.a. Income in Galway €80 Income in Galway €120arrow_forwardSuppose there is a new preventative treatment for a common disease. If you take the preventative treatment, it reduces the average amount of time you spend sick by 10%. The optimal combination of Z (home goods) and H (health goods) _____. Suppose there is a new preventative treatment for a common disease. If you take the preventative treatment, it reduces the average amount of time you spend sick by 10%. The optimal combination of Z (home goods) and H (health goods) _____. a. both may decrease b. H may increase; Z may not change c. both may increase or one may stay the same while the other increases. d. Z may increase; H may decrease e. both may increasearrow_forwardBriefly discuss four disadvantages of using Cost-benefit analysis to measure utility.arrow_forward
- what are some keypoints about behavioral economics?arrow_forwardWhat is the goal of behavioral economics? Group of answer choices To eliminate the consumers’ state of mind from consideration in economic analysis. To shift economic theory from a mathematical base to more of a psychological study. To integrate the insights of psychology into economics to enrich our understanding of decision-making. To study consumer behavior over time rather than behavior in the moment and integrate these insights in economic analysis.arrow_forwardA central idea of economics is that by observing changes in ________, we can predict how choices change. enticements motivation incentives inducementarrow_forward
- Do you think the model of consumer equilibrium describes how people really make the decisions on what to order to in a restaurant to maximize their utility? Is there a better model to measure consumer choice?arrow_forwardHow does utility theory differentiate a “need” from a “want”?arrow_forwardSuppose you and your friend go out for dinner. Your friend orders a cheeseburger and fries. When your food first arrives, you ask your friend if you can have one of his fries. He looks at you like you are crazy and says, "No!" Then a few minutes later, after you both have started eating, you ask again, and your friend reluctantly says, "Sure. Go ahead." An economist's explanation for your friend's change of heart is most likely to be that: Your friend's total utility declines as he eats more fries, so he's more likely to share with you after he's eaten a few. Your friend's marginal utility from eating additional fries declines as he eats more of them, so he's more likely to share with you after he's eaten a few. Your friend's total utility increases as he eats more fries, so he's more likely to share with you after he's eaten a few. Your friend's marginal utility from eating additional fries increases as he eats more of them, so he's more likely to share with you…arrow_forward
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