Charge of this negotiation

Reference no: EM133711891

Question: In the Sloan cafeteria, the price of a cup of coffee is $2.00 currently, and it is going to increase by $1.00. The Economics Department is concerned this will have a massive toll on graduate student morale, so they decide to compensate students by increasing their stipends until their utility is the same as it was before. Carolyn, whose preferences satisfy all five axioms of consumer theory, is in charge of this negotiation. She tells Chair Rose that since she drinks one cup of coffee a day, the department needs to compensate her $1×1×365=$365 to keep her utility the same as it was before the price increase.

Reference no: EM133711891

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