Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Chapter 6, Problem 14CTQ
The rules of politics are not always the same as the rules of economics. In discussions of setting budgets for government agencies, there is a strategy called “closing the Washington Monument.” When an agency faces the unwelcome prospect of a budget cut, it may decide to close a high-visibility attraction enjoyed by many people (like the Washington Monument). Explain in terms of diminishing
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The rules of politics are not always the same as the rules of economics. In discussions of setting budgets for government agencies, there is a strategy called “closing the Washington Monument.” When an agency faces the unwelcome prospect of a budget cut, it may decide to close a high-visibility attraction enjoyed by many people (like the Washington Monument). Explain in terms of diminishing marginal utility why the Washington Monument strategy is so misleading. Hint: If you are really trying to make the best of a budget cut, should you cut the items in your budget with the highest marginal utility or the lowest marginal utility? Does the Washington Monument strategy cut the items with the highest marginal utility or the lowest marginal utility?
Anon is a graduate student at Lock Haven University studying human behavior. Three subjects, Felicity, Terrance, and Lola, listed their utility for pineapple and watermelon. Anon believes he will be able to tell which subject likes pineapple the most by referring to the levels of utility each one reported. His adviser, Dr. Util, tells him his research is flawed. Explain why Dr. Util feels this way.
When consumers have a budget, their utility is maximized by buying a combination of goods such
that the marginal utility per dollar is the same for all of these goods. This is because
if this were not the case, it would mean that the consumer hadn't used up their entire budget.
of their insatiability.
if a consumer could get higher marginal utility from one good than from others, they would want to buy more
of that good, and less of others.
if a consumer could get higher marginal utility from one good than from others, they would want to buy less of
that good, and more of others.
it guarantees them some variety.
Chapter 6 Solutions
Principles of Economics 2e
Ch. 6 - Jeremy is deeply in love with Jasmine. Jasmine...Ch. 6 - Take Jeremys total utility information in Exercise...Ch. 6 - Explain all the reasons why a decrease in a...Ch. 6 - As a college student you work at a part-time job,...Ch. 6 - Who determines how much utility an individual will...Ch. 6 - Would you expect total utility to rise or fall...Ch. 6 - Would you expect marginal utility to rise or fall...Ch. 6 - Is it possible for total utility to increase while...Ch. 6 - If people do not have a complete mental picture of...Ch. 6 - What is the rule relating the ratio of marginal...
Ch. 6 - As a general rule, is it safe to assume that a...Ch. 6 - Why does a change in income cause a parallel shift...Ch. 6 - Think back to a purchase that you made recently....Ch. 6 - The rules of politics are not always the same as...Ch. 6 - Income Effects depend on the income elasticity of...Ch. 6 - Praxilla, who lived in ancient Greece, derives...Ch. 6 - If a 10 decrease in the price of one product that...
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