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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Concert Tickets
You are selling seats at an upcoming concert. The concert hall has a total of 8,500 seats, which will
include reserved seats and general admission seats. You're selling reserved seats for $9 each and
general admission seats for $5 each and are trying to decide how many of each kind of seat to offer. You
want to make money on the concert, but also want people who can't afford the more expensive seats to
come. You estimate your expenses for putting on the concert to be $50,000. You are hoping to make a
profit, or at least break even.
Assuming that you sell out the concert:
a. Determine an equation for your revenue and profit as a function of the number of reserved seats
you offer.
b. Graph your revenue and profit equations on the same graph. What do you notice about the two
functions? What does the slope of the lines represent in this situation?
c. Determine how many reserved seats you would need to offer in order to break even.
d. Determine how many reserved seats must…
Donuts are a big thing in Portland, OR. You go into one of the many donut establishments to purchase some number of these tasty (and even vegan or gluten free if required) treats. Let's say that
the first donut has higher utility for you, so you are willing to pay up to $2 for it. For the second donut you are willing to pay $1.50, the third $1, a fourth $0.50 and the fifth $0.00. This particular
bakery in Portland charges an average of $1 per donut. If you are a rational buyer (which can be hard when faced with so many different delicious donuts) then how many donuts do you
purchase, and how much consumer surplus (i.e., money saved compared to what you were willing to spend) do you have?
O 4 donuts, $5
O 2 donuts, $5
O 3 donuts, $1.50
O 1 donut, $0.50
Why would someone disagree with your preferred preference?
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- Home Juanita is deciding whether to buy a skirt that she wants, as well as where to buy it. Three stores carry the same skirt, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, located 15 minutes away from where she works, and pay a marked-up price of $103 for the skirt: Travel Time Each Way (Minutes) Store 15 Local Department Store 30 Across Town 60 Neighboring City Marked-up price Juanita's office Price of a Skirt (Dollars per skirt) 103 85 63 Discounted price Original price C C O Ⓒ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_forwardA friend of yours mentions to you that his PIBP for a shirt is a range of $40-$50. What argument can you give him to explain it is not wise to have a range for his PIBP?arrow_forward
- 1. Jack is considering selling his elliptical machine, which he never really used, is high quality, and has been taking up space in his spare bedroom. He lists it on Facebook Marketplace for "$1,200 or best offer" but in reality won't sell it for less than $1,000. Lina is looking to purchase a used elliptical machine. For a high-quality elliptical, she is willing to pay up to $1,300, and for a low-quality elliptical, she is willing to pay $600. Lina is risk neutral but she cannot tell if the elliptical machine is high quality or low quality. If she believes that 60% of used elliptical machines are high quality and 40% are low quality, what is the maximum price that Lina would be willing to pay? Would Jack agree to this price?arrow_forward"Wants are not limitless. This can be proven. I get all the breakfast I want every morning." Explainarrow_forwardWhat factors commonly influence a person’s daily buying choices? Select one of these and explain how one might counteract this influence to improve purchasing behavior.arrow_forward
- You have preferences u(x,y) = xy over games (X) and videos (Y) you can buy on a platform and a $360 budget, with prices px = 9 and py = 6. How much would you be willing to pay (at most) as a subscription fee for each of the following plans (you can buy any amount of Y in each plan at the original price, unless otherwise stated): (a) Plan A : You can buy (any amount of) X at a discounted price px = 4(b) Plan B : You are given 40 units of X for free, but you cannot buy any more of X. (surely can buy any amount of Y)(c) Plan C : You are given 30 units of X for free, but you cannot buy any more of X; you also have a discounted price for good Y; py = 4.arrow_forwardUtility equals satisfaction true or falsearrow_forwardYou are in the market for a new couch and havefound two advertisements for the kind of couchyou want to buy. One seller notes in her ad that sheis selling because she is moving to a smaller apartment, and the couch won’t fit in the new space.The other seller says he is selling because the couchdoesn’t match his other furniture. Which seller doyou expect to buy from? Why? ( Hint: Think whowould be the more motivated seller.)arrow_forward
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