Bundle: Principles of Microeconomics, 7th + Aplia, 1 term Printed Access Card
7th Edition
ISBN: 9781305124332
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 22, Problem 8PA
(a):
To determine
Total surplus.
(b):
To determine
The efficient outcome.
(c):
To determine
Preference of the person.
(d):
To determine
Majority preference.
(e):
To determine
Availability of different options.
(f):
To determine
Majority rule.
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Look at the two tables below. What is the total surplus if Bob buys a unit from Carlos? If Barb buys a unit from
Courtney? If Bob buys a unit from Chad? If you match up pairs of buyers and sellers so as to maximize the total surplus
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Maximum Price
Minimum
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Bob
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Carlos
$5
Barb
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2. Aaron and his friends Britney, Carlos, Diana, Emily, Frank, Gwen, Hugo, Isabela, and
Juliana have two choices for weekend activities. They can either go to the neighborhood
park or get together in Aaron's hot tub. The park isn't much fun, which means that the
benefits from being there are low on the friends' common utility scale. In fact, each of
the friends receives a benefit equal to 6 "utils" from being at the park. This benefit
doesn't depend on how many of the friends go to the park. Aaron's hot tub, on the
other hand, can be fun, but the benefits of using it depend on how many of the friends
are present. When the tub isn't too crowded, it's quite enjoyable. When lots of people
show up, however, the tub is decidedly less pleasant. The relationship between benefit
per person (measured in utils) and the number of people in the hot tub (denoted by T)
is
where AB denotes "average benefit."
a) Using the above formula, compute AB for T = 1,2,3,...,10. Next compute total
benefit from…
Three roommates, Alan, Billy and Casey, are planning to spend the weekend in their dorm room watching old movies, and they are debating how many to watch. Table below indicates their willingness to pay for each movie:
1st movie
2nd movie
3rd movie
4th movie
5th movie
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$20
$10
$0
$0
$0
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$0
$0
Casey
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$30
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Explain why some people believe that the showing of a movie within the dorm room is a public good.
Chapter 22 Solutions
Bundle: Principles of Microeconomics, 7th + Aplia, 1 term Printed Access Card
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