What explanation can you give for this behavior

Assignment Help Microeconomics
Reference no: EM131524582

Question: Imagine yourself in the following two situations:

a. You are about to go shopping to purchase a stereo system at a local store. Upon reading the newspaper, you find that another stereo store across town has the system you are interested in for $1,089.99. You had been planning to spend $1,099.95, the best price you had found after considerable shopping. Would you drive across town to purchase the stereo system at the other store?

b. You are about to go shopping to purchase a popcorn popper at a local hardware store for $19.95, the best price you have seen yet. Upon reading the paper, you discover that a department store across town has the same popper for $9.99. Would you drive across town to purchase the popper at the department store?

Many people would drive across town to save money on the popcorn popper, but not on the stereo system. Why is this inconsistent with expected utility? What explanation can you give for this behavior?

Reference no: EM131524582

Questions Cloud

Write an essay about wright : Write an essay about Wright. Frank Lloyd Wright designed hundreds of homes and buildings in the United States.
Topnotch should record the leases : sales-type leaseAs the accountant for TopNotch, explain how TopNotch should record the leases. Be sure to support your rationale.
Explain why this is inconsistent with expected utility : You have decided to see a show for which tickets cost $20. You bought your ticket in advance, but as you enter the theater, you find that you have lost.
Explain the meanings behind three pieces of art : For your first assignment, you will explain the meanings behind three pieces of art. You may choose the artworks for your presentation.
What explanation can you give for this behavior : You are about to go shopping to purchase a stereo system at a local store. Upon reading the newspaper, you find that another stereo store across town.
Determine the hospitals liability for medical malpractice : You must interview staff members and work with the General Counsel to determine the hospital's liability for negligence and medical malpractice.
Negotiation is a problem-solving process : Negotiation is a problem-solving process. You need to identify the problem, gather data, determine the best options, make a decision about the problem solution.
Review the given two scenarios : You have made a reservation to spend the weekend at the coast. To get the reservation, you had to make a nonrefundable $50 deposit.
Where did the situation occur and what is the effect : Who is involved?; Where did the situation occur?; Most importantly, why does this matter and what is the effect

Reviews

Write a Review

Microeconomics Questions & Answers

  The free rider problem

Question: Explain why the free rider problem makes it difficult for perfectly competitive markets to provide the Pareto efficient level of a public good.

  Failure of the super committee is good thing for economy

Some commentators have argued that the failure of the “Super committee” is good thing for the economy?  Do you agree?

  Case study analysis about optimum resource allocation

Case study analysis about optimum resource allocation: -  Why might you suspect (even without evidence) that the economy might not be able to produce all the schools and clinics the Ministers want? What constraints are there on an economy's productio..

  Fixed cost and vairiable cost

Questions:  :   Which of the following are likely to be fixed costs and which variable costs for a chocolate factory over the course of a month?  Explain your choice.

  Problem - total cost, average cost, marginal cost

Problem - Total Cost, Average Cost, Marginal Cost: -  Complete the following table of costs for a firm.  (Note: enter the figures in the  MC   column  between  outputs of  0 and 1, 1 and 2, 2 and 3, etc.)

  Oligopoly and demand curve problem

Problem based on Oligopoly and demand curve,  Draw and explain the demand curve facing each firm, and given this demand curve, does this mean that firms in the jeans industry do or do not compete against one another?

  Impact of external costs on resource allocation

Explain the impact of external costs and external benefits on resource allocation;  Why are public goods not produced in sufficient quantities by private markets?  Which of the following are examples of public goods (or services)? Delete the incorrec..

  Shifts in demand and movements along the demand curve

Describe the differences between shifts in demand and movements along the demand curve. What are the main factors which can shift the demand curve? Explain why they cause the demand curve to shift. Use examples and draw graphs to support your discuss..

  Article review question

Article Review Question: Read the following excerpts from the article "Fruit, veg costs surge' by Todd, Dagwell, published in the Herald on January 25th 2011 and answer questions below:

  Long-term growth, international trade & globalization

Long-term Growth, International Trade & Globalization:- This question deals with concepts such as long-term growth, international trade and globalization. Questions related to trade deficit, trade surplus, gains from trade, an international trade sce..

  European monetary union (emu) in crisis

"Does the economic bailout of Spain and Greece spell the beginning of the end for the European Monetary Union (EMU)?"

  Development game “settlers of catan”

Read the rules of the game, the overview and the almanac for the Development Game "Settlers of Catan"

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd