Principles Of Microeconomics
7th Edition
ISBN: 9781260111088
Author: Robert H. Frank, Ben Bernanke, Kate Antonovics, Ori Heffetz
Publisher: McGraw-Hill Education
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Chapter 1, Problem 3P
To determine
Explain the decision of attending the game.
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Your friend bought two tickets to see James Taylor play at the Save-On Center, but now her partner can’t make it. You knew about the concert, but you decided you’re not a big enough fan to pay $100 for a ticket. On the other hand, she would have bought tickets even if they cost $150 each. If you assume that she cannot sell the ticket anywhere else, what is the minimum price you can offer her for the ticket that she will accept? Explain your answer.
6) You have been assigned to create a new TV game show, and you have an interesting idea that you call, “I WANT TO BE A MILLIONAIRE.” The basics are: 1) two contestants; 2) the show begins with each contestant being given $1 million (!); and then 3) they begin playing a game that can increase or decrease that $1 million.
You worry that the initial outlay of $2 million will stun your producers, so you decide to prepare them with a simpler version of your game that you call: “I WANT $3.” There are four steps in this simpler game:
There are two contestants/opponents (who do not know each other and cannot communicate with each other during the game).
Each player is given $3 at the start of the game.
Independently and simultaneously, each player must choose whether they want to add $0, $1, $2 or $3 to their initial stake of $3. Doing so reduces their opponent’s award by $0, $2, $4, or $6, respectively.
Each player knows that their payoff at the end of the game is based on their initial…
6) You have been assigned to create a new TV game show, and you have an interesting idea that you call, “I WANT TO BE A MILLIONAIRE.” The basics are: 1) two contestants; 2) the show begins with each contestant being given $1 million (!), and then 3) they begin playing a game that can increase or decrease that $1 million. You worry that the initial outlay of $2 million will stun your producers, so you decide to prepare them with a simpler version of your game that you call: “I WANT $3.” There are four steps in this simpler game:
I. There are two contestants/opponents (who do not know each other and cannot communicate with each other during the game).
II. Each player is given $3 at the start of the game.
III. Independently and simultaneously, each player must choose whether they want to add $0, $1, $2 or $3 to their initial stake of $3. Doing so reduces their opponent’s award by $0, $2, $4, or $6, respectively.
IV. Each player knows that their payoff at the end of the game is based on…
Chapter 1 Solutions
Principles Of Microeconomics
Ch. 1.A - Prob. 1CCCh. 1.A - Prob. 2CCCh. 1.A - Prob. 3CCCh. 1.A - Prob. 4CCCh. 1.A - Prob. 5CCCh. 1.A - Prob. 6CCCh. 1 - Prob. 1RQCh. 1 - Prob. 2RQCh. 1 - Prob. 3RQCh. 1 - Prob. 4RQ
Ch. 1 - Prob. 5RQCh. 1 - Prob. 1PCh. 1 - Prob. 2PCh. 1 - Prob. 3PCh. 1 - Prob. 4PCh. 1 - Prob. 5PCh. 1 - Prob. 6PCh. 1 - Residents of your city are charged a fixed weekly...Ch. 1 - Prob. 8PCh. 1 - For each long-distance call anywhere in the...Ch. 1 - Prob. 10PCh. 1 - Prob. 1.1CCCh. 1 - Prob. 1.2CCCh. 1 - Prob. 1.3CCCh. 1 - Prob. 1.4CCCh. 1 - Prob. 1.5CC
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- 6) You have been assigned to create a new TV game show, and you have an interesting idea that you call, “I WANT TO BE A MILLIONAIRE.” The basics are: 1) two contestants; 2) the show begins with each contestant being given $1 million (!), and then 3) they begin playing a game that can increase or decrease that $1 million. You worry that the initial outlay of $2 million will stun your producers, so you decide to prepare them with a simpler version of your game that you call: “I WANT $3.” There are four steps in this simpler game: I. There are two contestants/opponents (who do not know each other and cannot communicate with each other during the game). II. Each player is given $3 at the start of the game. III. Independently and simultaneously, each player must choose whether they want to add $0, $1, $2 or $3 to their initial stake of $3. Doing so reduces their opponent’s award by $0, $2, $4, or $6, respectively. IV. Each player knows that their payoff at the end of the game is based on…arrow_forwardOn your way home from Super Groceries, your car breaks down. It is a hot summer day and you have nobody to call. With little time before the food spoils, you decide to prioritize what to carry on the walk home. You choose to take three items with you. Since you will need all five items today, you will replace the two abandoned items at the corner store near your house, Convenient Grocers. The table contains the prices you paid for each good at Super Groceries and the prices you will need to pay at Convenient Grocers to replace the goods. Which three items should you save? OOOOO vegetables fruits eggs ham milk Item milk eggs ham vegetables fruits Price at Super Groceries $3.75 $3.80 $2.95 $3.80 $2.50 Price at Convenient Grocers $4.25 $2.95 $5.25 $3.05 $3.80arrow_forwardMing lives in Seattle and recently bought a $125 ticket to attend a Seattle Seahawks game. He is a huge fan, so even though the ticket is pricey it is well below his willingness to pay of $250 However, as game day approaches, Ming receives an invitation from his friend, Cassandra, to spend the day at the Museum of Pop Culture touring a big exhibit on Marvel superheroes. The museum visit would only cost $75, but Ming (being a big Marvel fan too) would be willing to pay $150. What is his opportunity cost of going to the Seattle Seahawks game? Ming's total opportunity cost of going to the Seattle Seahawks game is $ (Enter a numeric response using an integer)arrow_forward
- Catherine wins a non-transferable, non-refudnable ticket to attend Saturday's baseball game. Taylor plans to attend the same game, but she knows from experience she can purchase a $40 ticket the day of the game. On the day of the game, it is cold with off-and-on rain showers, weather that both Catherine and Taylor equally dislike, making the prospect of attending the game less attractive than before. If both Catherine and Taylor have the same tastes and rational: a. Is one of them more likely to attend the baseball game than the other? b. Instead of winning a ticket, assume that last week Catherine paid $40 for the non-trasnferable, non-refundable ticket to Saturday's game. Would this change whether or not one of them is more likely to attend the baseball game?arrow_forwardSuppose the National Football League (NFL) wants to make Super Bowl tickets affordable for more football fans. The league therefore sets the price of a Super Bowl ticket below what is generally considered a fair market price. Suppose the price of a ticket for a regular seat at the Super Bowl is set at just $500. People who have tickets, however, can turn resell them online for $2,500 each, or more. If there are no transaction costs associated with online sales of Super Bowl tickets, the true cost to a fan of attending the Super Bowl is: O at least $2,500. O the monetary price paid to obtain the ticket. at most $500. $2,000 less than the opportunity cost of a ticket.arrow_forwardSuppose the National Football League (NFL) wants to make Super Bowl tickets affordable for more football fans. The league therefore sets the price of a Super Bowl ticket below what is generally considered a fair market price. Suppose the price of a ticket for a regular seat at the Super Bowl is set at just $500. People who have tickets, however, can turn resell them online for $2,500 each, or more. If there are no transaction costs associated with online sales of Super Bowl tickets, the true cost to a fan of attending the Super Bowl is:arrow_forward
- Imagine that you are at dinner with an acquaintance and that you are each independently choosing what to order for dinner: a burger (which costs $8), or a chicken ($12). In terms of enjoyment, you each have the same preferences: you value the burger at $14, chicken at $17. In other words, if you were dining alone and ordered a burger, your payoff would equal $14- $8 = $6. In this case, however, you will split the bill equally with your companion and thus your payoff depends both on your own order and the order of your acquaintance. Specifically, each diner's payoff is equal to the value of their own meal minus half the cost of the total bill. They also get a payoff of $2 when both of them choose the same meal. (a) Write down the normal form representation of the game in which both players are independently choosing between the actions Burger, Chicken. (b) What are pure and mixed Nash equilibria? Draw best response graphs according to beliefs.arrow_forwardYour classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfare is $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1,400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfare is $450. If you do not use the frequent-flyer coupon to fly to Miami, should you go to Miami? Multiple Choice Yes, your benefit is more than your cost. No, your benefit is less than your cost. Yes, your benefit is equal to your cost. No, because there are no benefits in the trip.arrow_forwardRealizing that there is a great potential for increased tax revenue, government officials in Homeyville began discussing how they could align Airbnb rentals with hotel stays from a tax perspective. Fast-forward to 2018, at which time Homeyville has finally made tax arrangements with Airbnb to levy a $40-per-room tax on rentals. However, now the market conditions have changed. More hosts have now entered the Airbnb market, and awareness of this hotel alternative has increased demand. The following graph shows the demand and supply curves for Airbnb rentals in 2018. Use the green rectangle (triangle symbols) to illustrate the area representing the revenue raised by a $40-per-room tax. Then use the black point (cross symbol) to shade the area representing the deadweight loss generated by this tax. PRICE (Dollars per rental) 200 190 180 Demand 2018 Tax Wedge 170 + 160 150 140 130 120 110 100 0 + 40 80 120 160 200 240 280 RENTALS (Rooms per day) Supply 2018 320 360 400 Tax Revenue…arrow_forward
- Ahmed is considering his plans for the coming weekend. He is currently working as a marketing specialist in a big advertising company. He normally spends the weekend with family but this weekend he is thinking of going on a camping trip that would cost him about $1,900. At the same time, his manager asked him whether he can help during the weekend and the company will be willing to pay him an overtime bonus of $1,000. If Ahmed goes on the camping trip, he can manage to provide a number of quick consultancy services that would earn him around $2,500. If Ahmed decided to go on the camping trip what would be the incremental cost of that decision ($)? a. None of the given answerS O b. 1,000 O c. 2,500 O d. 1,900 O e. 600arrow_forwardJia is considering whether to go out to dinner at a restaurant with her friend. The meal is expected to cost $40, Jia typically leaves a 20% tip, and an Uber will cost $5 each way. Jia values the restaurant meal at $25. Jia enjoys her friend's company and is willing to pay $30 just to spend an evening with her. If Jia does not go out to the restaurant, she will eat at home, using groceries that cost her $8.arrow_forwardJia is considering whether to go out to dinner at a restaurant with her friend. The meal is expected to cost $40, Jia typically leaves a 20% tip, and an Uber will cost $5 each way. Jia values the restaurant meal at $25. Jia enjoys her friend’s company and is willing to pay $30 just to spend an evening with her. If Jia does not go out to the restaurant, she will eat at home, using groceries that cost her $8. . Calculate Jia’s costs associated with going out to dinner with her friend. Calculate Jia’s benefits associated with going out to dinner with her friend. How I can resolve this problemarrow_forward
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