Tutorial Questions
Tutorial Questions
Topic 1
1.1 Mary and Margaret have the same preferences and incomes. Just as Mary arrived at the cinema to watch a 3D movie, she discovered that she had lost the $100 ticket she had purchased earlier. Margaret also just arrived at the cinema planning to buy a ticket to watch the same movie when she discovered that she had lost a $100 note from her wallet. If both Mary and Margaret are rational (who make decisions to maximize economic surplus) and both still have enough money to pay for the ticket, is one of them more likely than the other to go ahead to watch the movie anyway?
1.2 Your good friend asks you to go with her to a concert tonight. But you have already scheduled to give a tuition lesson to a secondary school student and you cannot reschedule the lesson to another time. To go to the concert, you will have to cancel the lesson, from which you could earn $200. To go with your friend to the concert, you will have to pay $500 for the ticket and spend $100 eating dinner with her at a nice restaurant. To ensure there is enough time to have dinner before the concert and return home not too late, you will have to take a taxi to the restaurant, which is right next to the concert hall, and then back home after the concert. The two taxi rides will cost you a total of $60. If you go to the tuition lesson as usual, you will spend only $30 on your dinner and you can walk to your student’s home. Assuming you are rational and there is no other cost you need to consider, what would have to be the minimum benefit you can get from the dinner and the concert to make you willing to go out with you friend tonight?
1.3 “No matter what is the price of an economics textbook, each student will buy at most only one copy. Therefore the market demand curve for an economics textbook is a vertical line.” Explain whether this statement is true or false.
1.4 Why do the prices of some goods, like airline tickets to Europe, go up during the months of heaviest
Topic 1
1.1 Mary and Margaret have the same preferences and incomes. Just as Mary arrived at the cinema to watch a 3D movie, she discovered that she had lost the $100 ticket she had purchased earlier. Margaret also just arrived at the cinema planning to buy a ticket to watch the same movie when she discovered that she had lost a $100 note from her wallet. If both Mary and Margaret are rational (who make decisions to maximize economic surplus) and both still have enough money to pay for the ticket, is one of them more likely than the other to go ahead to watch the movie anyway?
1.2 Your good friend asks you to go with her to a concert tonight. But you have already scheduled to give a tuition lesson to a secondary school student and you cannot reschedule the lesson to another time. To go to the concert, you will have to cancel the lesson, from which you could earn $200. To go with your friend to the concert, you will have to pay $500 for the ticket and spend $100 eating dinner with her at a nice restaurant. To ensure there is enough time to have dinner before the concert and return home not too late, you will have to take a taxi to the restaurant, which is right next to the concert hall, and then back home after the concert. The two taxi rides will cost you a total of $60. If you go to the tuition lesson as usual, you will spend only $30 on your dinner and you can walk to your student’s home. Assuming you are rational and there is no other cost you need to consider, what would have to be the minimum benefit you can get from the dinner and the concert to make you willing to go out with you friend tonight?
1.3 “No matter what is the price of an economics textbook, each student will buy at most only one copy. Therefore the market demand curve for an economics textbook is a vertical line.” Explain whether this statement is true or false.
1.4 Why do the prices of some goods, like airline tickets to Europe, go up during the months of heaviest