Microeconomics (MindTap Course List)
10th Edition
ISBN: 9781285859484
Author: William Boyes, Michael Melvin
Publisher: Cengage Learning
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Question
Chapter 7, Problem 6E
To determine
Difference in behavior of guests in different situations.
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Rick thinks either Morty or Summer broke his TV. Morty and Summer each have to decide simultaneously whether to take the blame or blame the other person. If they both blame the same person (both blame Morty or both blame Summer), the person they blame gets a small punishment and utility of -2, while the blameless person gets a utility of 0. Otherwise (if they both blame the other or both blame themselves), they both get a more severe punishment and a utility of -10.
Suppose Mr. and Mrs. Ward agreed not to vote in tomorrow’s election. Would such an agreement improve utility? Would such an agreement be an equilibrium?
I am unsure the direction the utility functions would go in , with this specific scenario
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Microeconomics (MindTap Course List)
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- Rick thinks either Morty or Summer broke his TV. Morty and Summer each have to decide simultaneously whether to take the blame or blame the other person. If they both blame the same person (both blame Morty or both blame Summer), the person they blame gets a small punishment and utility of -2, while the blameless person gets a utility of 0. Otherwise (if they both blame the other or both blame themselves), they both get a more severe punishment and a utility of -10. Suppose instead there are three suspects: Morty, Summer, and Jerry. Otherwise, the rules are the same as before. Draw the normal (matrix) form of the game. Hint: draw three matrices, with Morty choosing the row, Summer choosing the column, and Jerry choosing between the three matricesarrow_forwardWhich of the following statements is false? Group of answer choices If marginal utility is negative, then total utility is downward-sloping. If marginal utility is decreasing, then total utility is decreasing. If marginal utility is diminishing, then total utility is concave. If marginal utility is diminishing, then total utility is increasing but at a decreasing rate.arrow_forwardExplain how revealed preferences indicate which goods or activities give aperson the most utility.arrow_forward
- You were presented with a utility maximizing rule which states: If you always choose the item with the greatest marginal utility per dollar spent, when your budget is exhausted, the utility maximizing choice should occur where the marginal utility per dollar spent is the same for both goods. That rule is expressed as follows: Group of answer choices (The marginal utility associated with good 1 / the price of good 2) = (the marginal utility associated with good 2 / the price of good 1) % change in price / % change in quantity (The marginal utility associated with good 1 / the price of good 1) = (the marginal utility associated with good 2 / the price of good 2) The marginal utility per dollar of good 1 > the marginal utility per dollar of good 2.arrow_forwardRick thinks either Morty or Summer broke his TV. Morty and Summer each have to decide simultaneously whether to take the blame or blame the other person. If they both blame the same person (both blame Morty or both blame Summer), the person they blame gets a small punishment and utility of -2, while the blameless person gets a utility of 0. Otherwise (if they both blame the other or both blame themselves), they both get a more severe punishment and a utility of -10.a. Draw the normal (matrix) form of this game, with Morty choosing the row and Summer choosing the column. Does either Morty or Summer have a dominant strategy? Explain your answer. Note: only Morty and Summerare players in this Game. Rick designed the game and is not a player. b. Find all Nash equilibria of this game. c. Suppose instead there are three suspects: Morty, Summer, and Jerry. Otherwise, the rules are the same as before. Draw the normal (matrix) form of the game. Hint: draw three matrices, with Morty choosing the…arrow_forwardRick thinks either Morty or Summer broke his TV. Morty and Summer each have to decide simultaneously whether to take the blame or blame the other person. If they both blame the same person (both blame Morty or both blame Summer), the person they blame gets a small punishment and utility of -2, while the blameless person gets a utility of 0. Otherwise (if they both blame the other or both blame themselves), they both get a more severe punishment and a utility of -10. a.Draw the normal (matrix) form of this game, with Morty choosing the row and Summer choosing the column. Does either Morty or Summer have a dominant strategy? Explain your answer. Note: only Morty and Summer are players in this Game. Rick designed the game and is not a player. b.Find all Nash equilibria of this game. c.Suppose instead there are three suspects: Morty, Summer, and Jerry. Otherwise, the rules are the same as before. Draw the normal (matrix) form of the game. d.Find all Nash equilibria of the three-player…arrow_forward
- Suppose a consumer has a budget of $200 to spend on two goods, X and Y, whose prices are $20 and $10, respectively. If the consumer is observed to buy 5 units of X and 10 units of Y, where the respective Marginal Utilities of X and Y are, 50 and 40 utils, is the consumer in equilibrium? Explain why or why not. If the consumer is not in equilibrium under conditions in d), suggest another combination that would possibly achieve equilibrium. Explain your answer.arrow_forwardA discussion about psychological law of consumption?arrow_forwardTrue/ false Describe Since a greater utility number indicates that a consumer is better off, utility numbers cannot be negative.arrow_forward
- An economics professor finds that he strictly prefers a $10 bottle of wine over an $8 bottle, and a $12 bottle over a $10 bottle, and so on, but an $8 bottle over a $200 bottle. Explain why this makes him irrational according to a behavioral economics theory.arrow_forwardTeachers at the local school have contacted the company We R' Write with a complaint. Teachers noticed that when We R' Write sold individual pencils, students made sure to take care of the pencils. However, when the company started selling larger packages of pencils, students started needlessly breaking their pencils, using them for purposes other than doing school work, or even just throwing them away. You have been provided with information regarding the quantity and total utility gained from students purchasing different numbers of pencils that is presented in Table 1 below. Table 2 provides information concerning pens, which will be used to answer the question in the third bullet below. Explain the law of diminishing marginal utility from the standpoint of economic theory as it applies to the situation described in the scenario. Explain what specifically We R' Write should understand about marginal utility as the quantity consumed increases that would explain why students…arrow_forward
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