Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 8, Problem 2P
To determine
Efficiency of purchase choices based on offers.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Upon graduating from UT this May, you take on a management position working at UtMax theater. You will consider the utility of seeing performance over 1 month, and suppose that at a regular price of $$$ per ticket (my assigned ticket price is 145), customers will see no performance, however with the price reduced by $5, customers will see one performance per month and when reduced by $10, customers will see two performances. As long as the number performances, x, is small, your demand function for performance can be modeled by p=D(x).
Write down your demand function.
Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either call her on the land-line phone for five cents per minute or he can drive to see her, at a round-trip cost of $2 in gasoline money. He has a total of $10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses a handy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values in Table 6.6,figureoutthepointsonJeremy’sconsumptionchoicebudgetconstraint(itmaybehelpfultodoasketch) and identify his utility-maximizing point. 3. Explain all the reasons why a decrease in a product's price would lead to an increase in purchases. 4. Asacollegestudentyouworkatapart-timejob,butyourparentsalsosendyouamonthly“allowance.” Suppose onemonthyourparentsforgottosendthecheck.Showgraphicallyhowyourbudgetconstraintisaffected.Assuming you only buy normal goods, what would happen to your purchases of goods?
Sean is arguing with his girlfriend, Yvette. They have been going out for a little more than two years.
YVETTE: I'm leaving you, Sean. Get over it.
SEAN: Are you saying that being single will make you happier than you've been with me? Speaking personally, I think the
utility
we've had in this relationship was much more than you could have had if you'd been single this whole time!
YVETTE: I had taken an economics class and the word "utility" rings a bell. It's not that at all. We've had a fine time. It's that the
utility I would get by continuing our relationship isn't worth it anymore.
SEAN: I've never been dumped by someone citing the law of
before. You're a piece of work, you know that?
Yvette doesn't hear. She has already walked off, leaving Sean feeling like something of a sunk cost.
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- 3.15 Mandy is ordering a set of football tickets for the coming season. She plans to sell the tickets to make some money. There are two types of tickets: tickets for road games and tickets for home games. For each road game ticket, she could make a profit of $150, and for each home game ticket, the profit is $50 on average. The ticket office offers two price options: (a) $5/home ticket, and no more than $50 purchase per person; $50/road ticket, and no more than $300 purchase per person. (b) $7.5/home ticket, and no more than S100 purchase per person; $45/road ticket, and no more than $250 purchase per person. How many tickets of each type should Mandy purchase so as to maximize the total profit she can make?arrow_forwardMika earns $379 per week which she spends entirely at the grocery store, purchasing either food or alcohol. The price of food is $1/unit, while the price of alcohol is $4/unit. Mika receives an additional $50/week in food stamps that can only be only be used to buy food at the grocery store (so, this money could be used to buy food but NOT alcohol). Mika knows someone who will give her cash in exchange these food stamps at a rate of $0.50 in cash for every $1 in food. stamps. Cash, of course, can be used to buy either food or alcohol. What is the vertical coordinate of the vertical intercept of Mika's budget constraint if she were to graph quantity of food on the horizontal axis and quantity of alcohol on the vertical axis? (Note: The answer may not be a whole number, so round to the nearest hundredth)arrow_forwardConcert 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…arrow_forward
- In the economy of Queensland, two products (Sta and Star) are prominent due to their quality and durability. At the price of GHȼ 30 for Sta, 5,000 quantities of Sta are demanded. Stonewall, a banker lives in this economy and earns a weekly income of GHȼ 2,000. At this income level, Stonewall consumes 100 quantities of Star monthly. The price of Sta increases by 50%, now 4,000 quantities of Sta are demanded. At the initial price of Sta, 1000 quantities of Star were demanded but at the new price of Sta, 3,000 quantities of Star are demanded. Stonewall attains a professional qualification thus his weekly income increases by 20%, at the new income level; he consumes 200 quantities of Star monthly.a) Determine the Own Price Elasticity of Demand for Sta and interpret your answer?b) Determine the Cross Price Elasticity of Demand for both products and interpret the relationship between the two products? c) Determine the monthly Income Elasticity of Demand for Star and explain the nature of…arrow_forwardDonuts 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, $0.50arrow_forwardAlex, who was convinced that "Football is coming home", was very excited for the World Cup last year. Unfortunately, he realized that his favourite Paul Gascoigne jersey from Euro 1996 was getting old, so he wanted to buy a new one before England's first game the following week. He could either buy a 2014 James Milner shirt from retailer A, which would make him totally happy (utility=1), or a 2006 David Beckham shirt from retailer B, which gives him a utility of 0.8. However, the shirts are not available today. There is a 50% chance that retailer A will have the shirt on the week-end, and 70% chance that retailer B will have theirs on the week-end. Due to time and work constraints, Alex can only visit one of these retailers before the tournament starts, otherwise he will have to keep his old 1996 shirt, which gives him a utility of 0.5. He can also ask his friend Nathan to check both places in the morning. But being a Welsh supporter, Nathan will not do it for free and wants some money…arrow_forward
- Ming 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_forwardYou must allocate the 70,000 seats in Reliant Stadium (in Houston) among Texan (Houston) and Cowboy (Dallas) fans for an upcoming game between the two footfall teams. You can set different prices for seats in the Dallas and Houston sections of the stadium. Suppose you can obtain $40/ticket from Houston fans irrespective of the number of seats you allocate to Houston fans. You must drop price in order to sell more tickets to Dallas fans, however. Let Q be the number of tickets you allocate to Dallas fans. Assume that the maximum price you can charge for these tickets is given by the following inverse demand function P= 80 500 (a) Express the total revenue (on all 70,000 seats) from ticket sales as a function of Q; (b) Derive the first-order condition of the revenue-maximizing problem (it's a function about Q); (c) What is the optimal number of seats allocated to Dallas fans?arrow_forwardAlex, who was convinced that "Football is coming home", was very excited for the World Cup last year. Unfortunately, he realized that his favourite Paul Gascoigne jersey from Euro 1996 was getting old, so he wanted to buy a new one before England's first game the following week. He could either buy a 2014 James Milner shirt from retailer A, which would make him totally happy (utility=1), or a 2006 David Beckham shirt from retailer B, which gives him a utility of 0.8. However, the shirts are not available today. There is a 50% chance that retailer A will have the shirt on the week-end, and 70% chance that retailer B will have theirs on the week-end. Due to time and work constraints, Alex can only visit one of these retailers before the tournament starts, otherwise he will have to keep his old 1996 shirt, which gives him a utility of 0.5. He can also ask his friend Nathan to check both places in the morning. But being a Welsh supporter, Nathan will not do it for free and wants some…arrow_forward
- Several local golf tournaments are coming up and Tommy needs to purchase golf balls in preparation. He has set a $150 budget and will choose golf balls that will give him as much utility as possible. A local sporting goods store sells a box of golf balls at a retail price of $30 and Tommy purchases 2 boxes. A few buddies tell Tommy about an online store that offers boxes of golf balls at a discounted price of $21, while all other prices remain the same, and Tommy decides to purchase 3 additional boxes of golf balls to keep on hand. Given this information, plot Tommy's demand curve for golf balls. Provide your answer below: Price of Golf Ball Boxes Online Store (4,$22) 20 Local Store (1,$10) —101 Quantity of Golf Ball Boxesarrow_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_forwardYou were presented with a utility maximizing rule which states: If you always choose the item with the greatest marginal utility per dollar spent, when your budget is exhausted, the utility maximizing choice should occur where the marginal utility per dollar spent is the same for both goods. That rule is expressed as follows: Group of answer choices (The marginal utility associated with good 1 / the price of good 2) = (the marginal utility associated with good 2 / the price of good 1) % change in price / % change in quantity (The marginal utility associated with good 1 / the price of good 1) = (the marginal utility associated with good 2 / the price of good 2) The marginal utility per dollar of good 1 > the marginal utility per dollar of good 2.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc