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Microeconomics / Utility & Behavioral Economics

1. If you were to take $1 from a rich person and gave it to a poor person, the rich person looses less utility than the poor person gains. Would you agree or disagree, and why? 2. Please provide an example of personal transportation choices (1) for short distances (less than 400 miles) and longer distances (in excess of 800 m

Everyone who wants to buy the object writes down a number.

Suppose someone is selling some object in the following (kind of unusual) way. Everyone who wants to buy the object writes down a number. The person who wrote the highest number gets to buy the object, but gets charged the second highest number. All player's have a private value from the object, which is random. Suppose t


CH 18-4 Some people are good drives and others are bad drives. The former have a 10% chance of crashing their cars and the later have a 30% chance. All have a total wealth of 400 but this will fall to 100 if they crash their cars. In other words, each will lose 300 of wealth if crash. You're an insurance company who wishes

problem of maximizing the utility function

Consider the problem of maximizing the utility function u = f(c) + g(s) subject to the budget constraint pc + s=y where c is consumption and s is savings. derive and interpret the Slutsky equations and explain what happens if g double prime (s) = 0

Economics Questions

Economics Question 1 Raju has $100 a week to spend on itunes and cases of beer. The price of an itune album is $10; the price of a case of beer is $20. He faces the following indifference curves: a. What is the relative price of an album in terms of cases of beer? b. Calculate the opportunity cost of consuming a case of b

Economics of Internet Descriptions

For yootles tool, please go to yootles.com, click > "Start using Yootles!" and log in with the username: bwkoo See attached file for full problem description.

Utility Functions and Budget Constraints

A households utility is given by: u(C, 1 − L) = C^0.5 + (1 &− L)^0.5 where C is the total household consumption and L is the labor supply of the child. 0<L<1 and L+e=1, where e is education. The household budget constraint is: C=Y=Ya+wL where Y is total household income, Ya is adult income and is assumed to be fixed, w

Affect the optimal combination of products A, B, and C

Refer to Table 13.1 and suppose the price of new product C is $2 instead of $4. How does this affect the optimal combination of products A, B, and C for the person represented by the data? Explain: "The success of a new product depends not only on its marginal utility but also on its price." See attached file for full pr

maximize utility subject to the budget constraint

1. Consider the utility functions of the form . Show that the implied demand curves are (see attached file for equations) 2. Suppose a consumer will have income this year and next year. He or she consumes this year and next year, being able to borrow and lend at interest rate . Assume the consumer maximizes th

Consumption Possibilities Curve

Please include graph and an explanation of how the answer was solved. 6. In problem 4, Pete's uncle gives him $60 to spend on concert tickets, so he now has $260. a. Draw a graph that shows Pete's consumption possibilities. b. How many rock concerts and how many operas does Pete now attend? Information: Problem 4 Pete

True or False with brief explanation why.

True or False. Brief explanation is required. a. A barrier to entry creates an advantage for incumbents over new arrivals. True or false, explain. b. Rent control in New York is a prominent example of price floor. True or false, explain. c. When price is higher than the marginal revenue but lower than the average var

Economics inquiries

1)What role does economics play in our personal decisions? What role does economics play in the organizational decisions? 2)How does the availability of substitutes affect purchasing decisions? 3)How does a surplus or a shortage of a good or service affect the market price? How does global economic competition

Real world risk distribution

Suppose a population consists of two equally-sized groups: - Type 1 individuals have a 15% annual chance of experiencing a catastrophic health care event thaat will reduce their wealth by $40,000. - Type 2 individuals have a 25% annual chance of experiencing a catastrophic health care even that will reduce their wealth by $40,

Probability/Utility Square Roots

You have a person whose utility is U = Square root of I. They have two choices: A. Vote for action B. Vote against action. If they choose B. They get $5 Million. If they choose A. they have a 30% chance of making $80 million and 70% chance of making $1 million. So far so good. But if they make the $80 million, there is a poss

Expected Utility and Risk Aversion

We are going to have problems on the exam which give you a utility function for a person (U=2/I, or square root of I, etc), and their income with different probabilities. Like 40% chance of being fine and making $100 and 60% chance of getting hurt and paying $10 of it for medical bills or whatever. So the question will ask some

Managerial Economics

Some foolish teenagers play "chicken" on Friday nights. Two teenagers drive their cars at each other at high speeds. The first to swerve to the side is the "chicken" and loses. If both swerve out of the way, they are both chicken and both lose. Neithe4r of the drivers wants to get into an accident. It causes a significant lo

Behaving Optimally and Utility Maximization

Consider a utility-maximizing consumer who devotes all of his weekly income, I = $720 to purchases of caviar (available at the market price, px = $10 per serving) and high-end denim jeans (available at the market price py=$120 per pair). Compute this consumer's optimal consumption of caviar (x) and jeans (y) for each of the foll

Utility, Uncertainty, Adverse Selection

Please see the attachment. I require very specific explanations for each part. If necessary, assumptions may be made but please make these explicit and make sure they are reasonable so that I can follow what you did.

Household reaction on spending

The following table gives a hypothetical total utility schedule for the Cookie Monster (CM): Number of cookies Total Utility 0 0 1 100 2 200 3

Expected Utility Economic Reasoning

(See attached file for full problem descriptions) --- 1. Sam's utility function... 2. Use standard economic reasoning... 3. How does a class action differ... 4. Suppose a potential injurer... 5. Suppose that when injurers are sued... ---

Internet communication (such as email)

2.1. In the readings we saw that Internet communication (such as email) consumed on average 57% of the time spent online and Internet browsing (such as visiting web sites) used the other 43%. We also saw that the average online user in the U.S. spent approximately 3 hours per day using the Net. Assume the incremental monetary

Utility maximizing choice

If Fred is on a set salary and can only eat ham and drink tea. He drinks 4 bottles of tea and eats 10 lbs of ham. The price of tea is $10 per bottle and $4 per lb of ham. The last bottle of tea added 50 units to Fred's utility and the last lb of ham added 40 units. Would you consider that Fred was making a utility-maximizing