Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Question
Chapter 19, Problem 8QE
To determine
Water diamond paradox.
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Check out a sample textbook solutionStudents have asked these similar questions
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
€120
According to Kahneman and Tversky, what is the major problem they find with the basic tenets of utility theory?
According to Chapter 3- History of Economic Thought by Hunt
What do subscribers to the utility theory of value mean by the " water-diamond paradox" when discussing Smith's distinction between " value in use" and " value in exchange." ? How does Hunt explain Smith's position?
Chapter 19 Solutions
Microeconomics
Ch. 19.1 - Prob. 1QCh. 19.1 - Prob. 2QCh. 19.1 - Prob. 3QCh. 19.1 - Prob. 4QCh. 19.1 - Prob. 5QCh. 19.1 - Prob. 6QCh. 19.1 - Prob. 7QCh. 19.1 - Prob. 8QCh. 19.1 - Prob. 9QCh. 19.1 - Prob. 10Q
Ch. 19.A - Prob. 1QECh. 19.A - Prob. 2QECh. 19.A - Prob. 3QECh. 19.A - Prob. 4QECh. 19 - Prob. 1QECh. 19 - Prob. 2QECh. 19 - Prob. 3QECh. 19 - Prob. 4QECh. 19 - Prob. 5QECh. 19 - Prob. 6QECh. 19 - Prob. 7QECh. 19 - Prob. 8QECh. 19 - Prob. 9QECh. 19 - Prob. 10QECh. 19 - Prob. 11QECh. 19 - Prob. 12QECh. 19 - Prob. 13QECh. 19 - Prob. 14QECh. 19 - Prob. 15QECh. 19 - Prob. 16QECh. 19 - Prob. 1QAPCh. 19 - Prob. 2QAPCh. 19 - Prob. 3QAPCh. 19 - Prob. 4QAPCh. 19 - Prob. 5QAPCh. 19 - Prob. 1IPCh. 19 - Prob. 2IPCh. 19 - Prob. 3IPCh. 19 - Prob. 4IPCh. 19 - Prob. 5IPCh. 19 - Prob. 6IPCh. 19 - Prob. 7IPCh. 19 - Prob. 8IPCh. 19 - Prob. 9IPCh. 19 - Prob. 10IP
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Similar questions
- What part of utility theory would be classified as an abnormality in Thomas Kuhn's view?arrow_forwardDefine Degree of necessity?arrow_forwardBy using consumer choice theory, explain why diamonds, which are not necessary to sustain life, are expensive, whereas water, which is necessary for life, is not.arrow_forward
- Which of the following are true about utility functions? options: A) In economics courses we learn to use our utility functions to help us make rational decisions. B) Economists use utility functions to transfer goods from people who have less marginal utility to those who have greater marginal utility from the good. C) Only rational people have utility functions. D) They are a mathematical object that can represent preferences.arrow_forwardWhat is cardinal utility theory?arrow_forwardHow does utility theory differentiate a “need” from a “want”?arrow_forward
- If the price of a good or service is lowered and people buy more of this good or service, this finding is associated with principle # _____?arrow_forwardIn economics, we have learned that related goods’ price does matter. Given the budget constraint and everything else remains the same, an individual consumer switches to relatively cheaper goods (also known as substitution effect). Often when you visit a chemist shop with your doctor’s prescription, your pharmacist may ask whether you are interested in buying a relatively cheaper drug (which is biologically equivalent to your prescribed drug) if it is available. what seems to be a problem that may arise when one switches to a cheaper drug.arrow_forwardBecause consumers purchase either Coke or Pepsi, economists call these “inferior” goods. Select one: True Falsearrow_forward
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