EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Question
Chapter 17, Problem 7RQ
To determine
To know:Reason for rationality behavior depicted by Odysseus’s and examples of commitment devices used in real world.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Two players play the Ultimatum Game, in which they are to split $20. A purely rational agent would only reject an offer of …
What is the meaning of the denial of entanglement?
Two players play the Ultimatum Game, in which they are to split $20. A purely rational agent would only reject an offer of …
Group of answer choices...
-$20
-$19
-$1
-$0
-$10
Chapter 17 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 17.3 - Prob. 1MQCh. 17.3 - Prob. 2MQCh. 17.3 - Prob. 1.1MQCh. 17.3 - Prob. 1.2MQCh. 17.3 - Prob. 2.2MQCh. 17.3 - Prob. 1.3MQCh. 17.3 - Prob. 1TTACh. 17.3 - Prob. 2TTACh. 17.4 - Prob. 1TTACh. 17.4 - Prob. 2TTA
Ch. 17.4 - Prob. 1.1TTACh. 17.4 - Prob. 2.1TTACh. 17.4 - Prob. 1MQCh. 17.4 - Prob. 1.2TTACh. 17.4 - Prob. 2.2TTACh. 17.5 - Prob. 1MQCh. 17.5 - Prob. 2MQCh. 17.6 - Prob. 1TTACh. 17.6 - Prob. 2TTACh. 17 - Prob. 1RQCh. 17 - Prob. 2RQCh. 17 - Prob. 3RQCh. 17 - Prob. 4RQCh. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - Prob. 7RQCh. 17 - Prob. 8RQCh. 17 - Prob. 9RQCh. 17 - Prob. 10RQCh. 17 - Prob. 17.1PCh. 17 - Prob. 17.2PCh. 17 - Prob. 17.3PCh. 17 - Prob. 17.4PCh. 17 - Prob. 17.5PCh. 17 - Prob. 17.6PCh. 17 - Prob. 17.7PCh. 17 - Prob. 17.8PCh. 17 - Prob. 17.9PCh. 17 - Prob. 17.10P
Knowledge Booster
Similar questions
- For the rest of this question consider a two goods economy where Kim and Jung can trade Ferraris (good x) and VR headsets (good y) with each other. Kim and Jung both enjoy driving Ferraris and having more VR headsets (so more friends can play the same game). They start at the same (high) level of income. Kim has an initial endowment of (x0k, y0k) = (10,30) and Jung has an initial endowment of (x0j, y0j) = (30,10) d) Assume that a social planner could redistribute initial wealth (the amounts of ? and ? that Kim and Jung have). Can they reallocate resources so that Kim and Jung reach the allocation (Xk, Yk) = (20,20) and (Xj, Yj) = (20,20) as a general equilibrium (i.e. post-trade) allocation? Can the social planner redistribute resources to make the allocation where Jung owns all the resources in the economy a general equilibrium allocation?arrow_forwardSuppose you would have to pay Alicia at least $150 to get her to part with a ticket she just bought to see her favorite band play next Friday. Loss aversion implies that if Alicia had not yet bought the ticket, she would: Multiple Choice no longer be interested in purchasing it. be willing to pay more than $150 for it. be willing to pay exactly $150 for it. be willing to pay less than $150 for it.arrow_forwardFor the rest of this question consider a two goods economy where Kim and Jung can trade Ferraris (good x) and VR headsets (good y) with each other. Kim and Jung both enjoy driving Ferraris and having more VR headsets (so more friends can play the same game). They start at the same (high) level of income. Kim has an initial endowment of (x0k, y0k) = (10,30) and Jung has an initial endowment of (x0j, y0j) = (30,10) a) Illustrate the initial endowment in an Edgeworth box. Clearly label the axes and explain the dimensions of the box. Show the indifference curve each of them is on at the endowment point. b) Consider an allocation where Kim gets (xk, yk) = (40,40) and Jung gets the remaining Ferraris and VR headsets. Show where this point is in the Edgeworth box. Is this allocation Pareto efficient? Is it equitable? How likely is this to arise in practice?arrow_forward
- For the rest of this question consider a two goods economy where Kim and Jung can trade Ferraris (good x) and VR headsets (good y) with each other. Kim and Jung both enjoy driving Ferraris and having more VR headsets (so more friends can play the same game). They start at the same (high) level of income. Kim has an initial endowment of (x0k, y0k) = (10,30) and Jung has an initial endowment of (x0j, y0j) = (30,10) c) Assume that Kim has preferences Uk (Xk, Yk) = 3Xk + 3Yk and Jung has preferences Uj (Xj, Yj) = Xj + 3Yj. Will Kim and Jung trade? Calculate the general equilibrium allocation for Kim and Jung. Compute the utility at the endowment point and at the general equilibrium allocation. Is the new allocation on the contract curve?arrow_forwardKip is trying to decide whether to take a one-day martial arts class at Rex Kwan Do. The fee for the class is $400. Kip will also have to pay his brother Napoleon $150 for that day in return for giving him a ride into town. Instead of taking the class, Kip could spend all day on the computer chatting with his girl, LaFawnduh. This gives him a value of $300. On the other hand, he could spend all day working with his Uncle Rico and making sweet moolah. Uncle Rico has promised to pay him $350 on that day if he works with him. What is Kip’s marginal cost of joining Rex Kwan Do? Correct answer: $900 why don't you include 300 also? explanationarrow_forwardEvan knows his GPA would skyrocket if he could break his horrible habit of procrastinating. An example of a commitment device Evan could use would be: Question 46 options: a to allow himself one hour of leisure for every half-hour of studying he does each day. b to exercise before studying in order to be refreshed. c to pay a student to meet him each afternoon for 2 hours in the library to ensure he studies every day. d All of these are commitment devices.arrow_forward
- Rajiv is training for a biathlon, a winter racing sport that combines cross-country skiing and rifle shooting. Consider the following scenario: Rajiv has only 15 hours available to devote to his training this week. Each hour he spends skiing is one hour that cannot be spent working onhis shooting. Which basic principle of individual choice do these statements best illustrate? People face trade-offs. Rajiv has an incentive to spend more time on skiing than on shooting. People usually exploit opportunities to make themselves better off. Rajiv can use time most efficiently by spending the same amounts of time on skiing and shooting.arrow_forwardVan has plans to go to an opera and already has a $100 nonrefundable, nonexchangeable, and nontransferable ticket. Now Amy, whom Van has wanted to date for a long time, asks him to a party. Van would prefer to go to the party with Amy and forgo the opera, but he doesn't want to waste the $100 he spent on the opera ticket. From the perspective of an economist, if Van decides to go to the party with Amy, what has he just done? 1. Incorrectly allowed a sunk cost to influence his decision 2. Made a choice that was not optimal 3 Correctly ignored a sunk cost Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardYou are considering going to a football game. However, the roads are cover in ice due to bad weather. Your ticket was a gift. You derive a value of z from attending the game, and a cost of D for driving on the icy roads. Your utility function is given by: ug(Z) + ui(D) = In(Z - 3) - In(2 - D). In your ultimate wisdom, you calculate that the cost of driving on the icy roads is 1 unit (So, D=1). What is the minimum value you must obtain from attending the game, so that you decide to go? Solution sent me fast ..arrow_forward
- When consumers were given the opportunity to select a package of ground beef labeled “75% lean” or a package of ground beef labeled “25% fat,” most consumers chose “75% lean.” Why? What concept from the chapter does this illustrate? The reason is that consumers are swayed by cheap talk. Cheap talk is the concept. The reason is that consumers are much more likely to choose the alternative framed as the positive option. This is called a framing effect. The reason is that consumers infer the value of a product from positive advertising. This is called inference induction. The reason is that consumers respond better to higher numbers. They feel they are getting more because 75 is greater than 25. The concept is the endowment effect.arrow_forwardProblem 1. Andy (consumer A) and Red (consumer B) growing old together on a remote island on which only fish (good 1) and coconut (good 2) are available for consumption. Both Andy and Red have Cobb-Douglas preferences. That is, consumer i has u(xi, z) = (a)¹/2 (1)¹/2, where x is consumer i' s good j consumption with j = 1, 2. Also, Andy's ini- tial endowment is w (w, w) (1,3) while Red's initial endowment is w = (wi, wz) = = = = (3, 1). (a) Draw the Edgeworth box for this economy. Mark the point indicating the initial endowment of each consumer. (b) Draw the contract curve for this economy in an Edgeworth box (a graphical represen- tation is sufficient). Explain if it is Pareto efficient for Andy and Red to consume their endowments. (c) What is the set of allocations that could be the outcome under barter in this economy? (d) Let the price of fish be p₁ while the price of coconut be normalized to 1 without loss of generality. For each consumer, solve the utility maximization problem,…arrow_forwardKip is trying to decide whether to take a one-day martial arts class at Rex Kwan Do. The fee for the class is $400. Kip will also have to pay his brother Napoleon $150 for that day in return for giving him a ride into town. Instead of taking the class Kip could spend all day on the computer chatting with his girl, LaFawnduh. This gives him a value of $300. On the other hand, he could spend all day working with his Uncle Rico and making sweet moolah. Uncle Rico has promised to pay him $350 on that day if he works with him. What is Kip’s marginal cost of joining Rex Kwan Do? Group of answer choices $650 $550 $400 $300 $350 $150 $900arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning