Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 5, Problem 9QP
To determine
The problem of the parking space.
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ceteris paribus a consumer that purchases a sports car must consider the price of gasoline because these goods are
On Sundays, people in Los Angeles consider a boat to Catalina Island to spend the day on the beach there. The utility that a person gets from visiting Catalina is 1-[n/10] – p , where n is the number of visitors on the island and p is the price of round-trip transportation (by boat). (Note that a visitor obtains more satisfaction if there are fewer other visitors on the island). The utility of staying home is zero.
In equilibrium, how many people visit the island on a given Sunday? ( Your answer should depend on p.)
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
Chapter 5 Solutions
Microeconomics
Ch. 5.1 - Prob. 1STCh. 5.1 - Prob. 2STCh. 5.2 - Prob. 1STCh. 5.2 - Prob. 2STCh. 5.3 - Suppose college students are given two options....Ch. 5.3 - Prob. 2STCh. 5.4 - Prob. 1STCh. 5.4 - Prob. 2STCh. 5.5 - Prob. 1STCh. 5.5 - Prob. 2ST
Ch. 5.6 - Give an example to illustrate that someone may pay...Ch. 5.6 - Prob. 2STCh. 5.7 - Prob. 1STCh. 5.7 - Prob. 2STCh. 5.8 - Prob. 1STCh. 5.8 - Prob. 2STCh. 5.9 - Prob. 1STCh. 5.9 - Prob. 2STCh. 5.10 - Prob. 1STCh. 5.10 - Prob. 2STCh. 5.11 - Prob. 1STCh. 5.11 - Prob. 2STCh. 5.12 - Prob. 1STCh. 5.12 - Prob. 2STCh. 5 - Prob. 1QPCh. 5 - Prob. 2QPCh. 5 - Prob. 3QPCh. 5 - Prob. 4QPCh. 5 - Prob. 5QPCh. 5 - Prob. 6QPCh. 5 - Prob. 7QPCh. 5 - Prob. 8QPCh. 5 - Prob. 9QPCh. 5 - Prob. 10QPCh. 5 - Prob. 11QPCh. 5 - Prob. 12QPCh. 5 - Prob. 13QPCh. 5 - Prob. 14QPCh. 5 - Prob. 15QPCh. 5 - Prob. 16QPCh. 5 - Prob. 1WNGCh. 5 - Prob. 2WNGCh. 5 - Prob. 3WNGCh. 5 - Prob. 4WNGCh. 5 - Prob. 5WNGCh. 5 - Prob. 6WNG
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Similar questions
- Two students, Nick and Sofia, are discussing normal and inferior goods. Nick says that if Frodo buys more beer when the price of beer goes up, then beer must be an inferior good for Frodo. If, on the other hand, he buys less beer when the price of beer goes up, then beer must be a normal good for Frodo. Sofia disagrees: "Normal and inferior goods are about income changes, not price changes. Therefore, we do not have enough information: beer could be an inferior or normal good in either of these cases." Do you agree or disagree? Carefully explain your point of view. Support your argument with graphs of income, substitution and total effects (please put beer on the horizontal axis and the other goods on the vertical axis). Please assume that Frodo's preferences over beer and other goods are strictly convex and satisfy "more is better" assumption.arrow_forwardAt the start of the week, Marie decides to buy a pie. Does this imply that the utility she receives from this pie is greater than or less than her opportunity cost of purchasing the pie? Marie is thinking about purchasing a second pie. Do we expect the marginal utility she receives from the second pie to be greater than, less than, or equal to the marginal utility she receives from the first pie? Explain your answer.arrow_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_forward
- Martha spends 5 hours of free time exercising and playing music per day. The table below represents the level of utility she receives from the various combinations of exercise and music activities. For instance, if she only plays music, her total utility from exercise will be 0, and the utility from music will be 50. If she exercises for 1 hour, she will receive a level of utility of 25. Utility is measured in ‘utils’; those numbers are arbitrary and designed to quantify the benefits received from various actions. Utility for Exercise Utility from Music 0 utils from 0 hours of exercise 50 utils from 5 hours of music 25 utils for 1 hours of exercise 45 utils from 4 hours of music 40 35 45 20 50 0 Marginal analysis will help Martha in her decision making regarding how to spend her free time because ... All answers are correct. She will realize which activity is more important to her. She will be able to find the combination of music and exercise which gives…arrow_forwardReagan spends more time doing research regarding which car she is going to purchase than she does regarding which coffee maker to purchase. This illustrates the consumer choice principle that: the marginal utility derived from coffee is higher than a car. consumers ignore opportunity cost when doing research. consumers make decisions as if they have unlimited resources and income. the time and effort consumers spend in acquiring information is directly related to the potential value derived from the information.arrow_forwardWhat can a marketer do to positively influence a situation in which a consumer is ready to buy but has not yet done so?arrow_forward
- If buyers' preferences change so that they are willing to buy more widgets at each hypothetical price, the of/for widgets will demand, decrease supply, increase supply, decrease. demand, increase.arrow_forwardExplain how non-convexity in choice can result in multiple optimal choices. Provide a graphical solution.arrow_forwardKyle receives two free passes to the symphony as a bonus at work. He has never been to the symphony before and would probably not buy such tickets for their face value of $120. Kyle decides to use the tickets rather than sell them at face value. This type of behavior is: Question 49 options: a irrational, since Kyle would not pay $120 for the tickets, yet gives up $120 by not selling them. b rational, since Kyle can check out the symphony and not have to pay for it himself. c irrational, since Kyle ignores his sunk cost of $120. d rational, since Kyle does not ignore his sunk cost of $120.arrow_forward
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