EBK MICROECONOMICS
2nd Edition
ISBN: 8220103679701
Author: List
Publisher: YUZU
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Chapter 3, Problem 4P
To determine
Time spent studying for different quizzes when a time constraint is given.
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Assume two moms live next to each other and both have one preschooler. They meet each other for the first time and discover that both of them work part-time twice a week. It turns out that both of them have their children attend a child care facility close to home. Furthermore, they each learn that when one mom is working the other is at home and vice versa. One of the moms has an idea and proposes to the other mom that each take care of the other's child while they work. That way they can save money on child care. If they do this, what will happen to the official GDP reported by the government and why? Is society necessarily worse off as a result of this arrangement?
Question 30
Link and Zelda each have 12 hours a week they can spend making costumes and accessories for their cosplay group. Link has been doing this for years and can make a costume piece in 2 hours and an accessory item in 1 hour. Zelda is still learning and can make a costume piece in 3 hours and an accessory item in 2 hours.
The opportunity cost of 1 costume piece for Link in terms of accessory items (i.e. accessory items per costume piece):
You and a classmate are assigned a project on which you will receive one combined grade. You each want to receive a good grade, but you also want to avoid hard work. In particular, here is the situation:
•
If both of you work hard, you both get an A, which gives each of you 25 units of happiness.
•
If only one of you works hard, you both get a B, which gives each of you 15 units of happiness.
•
If neither of you works hard, you both get a D, which gives each of you 5 units of happiness.
•
Working hard costs 15 units of happiness.
Complete the following payoff matrix given the previous information. In each cell, your classmate's payoff is on the left and yours is on the right.
Your Decision
Work
Shirk
Classmate's Decision
Work
,
,
Shirk
,
,
The likely outcome is that your classmate and you .
If you get this classmate as your partner on a series of projects throughout the year, rather than only once, you are likely…
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- Two oil companies are deciding how much oil to extract from their properties, which lie above the same underground reservoir. The faster that oil is extracted, the less total oil is extracted. Letting x denote the extraction rate for company X and y denote the extraction rate for company Y, we assume that the total amount of oil extracted is 1/(x + y) million gallons of oil. Of the total amount that is extracted, the share going to company X is x/(x + y), and the share to company Y is y/(x + y); that is, a company’s share depends on how fast it extracts compared with the other company. The price of oil is $100 per gallon. Each company chooses its extraction rate from the interval [1,10] in order to maximize the monetary value of the oil that it extracts. Find the Nash equilibrium extraction rates. (Note: You can assume that the payoff function is hill shaped.)arrow_forwardSuppose that two corporations, Analytica and Bobmetrics, are negotiating the share of profit from a time sensitive joint project. The total profit generated by the project is £10 million. However, every day that the deal is delayed reduces the value of the total profit by £1 million. The way the negotiation is set up is the following: in the first day, Analytica’s lawyers propose a split of the profits, and Bobmetrics’ lawyers can agree, or they can discuss it some more and make their own offer on the second day. After that the two teams alternate. Analytica gets to make proposals on days 1, 3, 5, 7, and 9, while Bobmetrics makes proposals on days 2, 4, 6, 8 an 10. On day 11, the profit from the joint project becomes 0. The negotiations stop when either company accepts the proposal of the other, or on day 11. Find the subgame perfect Nash equilibria of this dynamic negotiation game. What happens when the loss of value is slower or faster? What conclusions can you draw? Briefly explain…arrow_forwardKrisha can pick 4 pounds of coffee beans in an hour or gather 2 pounds of nuts. Tom can pick 2 pounds of coffee beans in an hour or gather 4 pounds of nuts. Each works 6 hours per day. Together, what is the maximum number of pounds of coffee beans the two can pick in a day? What is the maximum number of pounds of nuts the two can gather in a day? Maximum amount of coffee beans pounds per day Maximum amount of nuts pounds per day Now suppose Krisha and Tom were gathering the maximum number of pounds of nuts when they decided that they would like to begin picking 8 pounds of coffee beans per day. Who would pick the coffee beans? How many pounds of nuts would they still be able to gather? Would it be possible for Krisha and Tom in total to gather 26 pounds of nuts and pick 20 pounds of coffee beans each day? If so, how much of each good should each person pick? The combination of 30 pounds of coffee beans and 12 pounds of nuts per day is show Krisha and Tom's combined daily PPC.arrow_forward
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