Microeconomics - With Access (Custom)
20th Edition
ISBN: 9781259877551
Author: McConnell
Publisher: MCG
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Chapter 8, Problem 5DQ
To determine
Define examples for cognitive biases.
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For each of the pairs below, determine whetherthey are positively correlated, negatively correlated, or uncorrelated. [LO 1.5]a. Time spent studying and test scoresb. Vaccination and illnessc. Soft drink preference and music preferenced. Income and education
Answer the given question with a proper explanation and step-by-step solution.
Angela and Betty are deciding how many nights to stay at a resort. Given above are the budget lines and indifference curves for both Angela and Betty. They are not travelling together and therefore will make independent decisions (they do not have to stay the same number ofnights) L1 is the budget line for each of them before any discounts are offered.
Each of them is offered a “Buy Three Nights Get One Free” deal, where if they stay for three nights the fourth night is free. This is just a one-time discount and all subsequent nights after the fourth night are at the undiscounted price. The budget line after the discount is the heavily shaded blue line L2. You may assume that each consumer wishes to maximize their utility (satisfaction) when determining the number of nights they will stay.
(a) With the budget line at L1 how many nights will Angela stay?(b) With L1 the budget line how many nights will Betty…
Complete the accompanying table and answer the accompanying questions. (L01, LO6, LO7)
a. At what level of the control variable are net benefits maximized?
b. What is the relation between marginal benefit and marginal cost at this levelof the variable?
Control Variable Q
Total Benefits B(Q)
Total Cost C(Q)
Net Benefits N(Q)
Marginal Benefit MB(Q)
Marginal Cost MC(Q)
Marginal Cost MC(Q)
100
1200
950
60
101
1400
70
102
1590
80
103
1770
90
104
1940
100
105
2100
110
106
2250
120
107
2390
130
108
2520
140
109
2640
150
110
2750
160
Chapter 8 Solutions
Microeconomics - With Access (Custom)
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