University of British Columbia Econ 451 Assignment 1 Instructor: Alfred Kong Due date: 29th September 2011 The assignment is due at the beginning of the class. Late assignment will not be accepted. You may work in a group of up to 5 people. Question 1 A new health minister proposes to distribute an apple a day for free to every citizen. To be effective the legislation states that the free apples may not be traded or sold. Explain why this “no trade” policy would be inefficient.
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13 Empirical consumption functions ................................................................................. 13 Uncertainty‚ rational expectations‚ and consumption ..................................................... 14 Quadratic utility ........................................................................................................ 16 F. Empirical Tests of the Random-Walk Hypothesis.................................... 16 Testing the random-walk hypothesis............
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lead to the maximum utility for society. Those people who not in our primary circle are following the rule that maybe totally different from what we observe. Just like the traffic rules is very different in different countries. Even if the total utility may increasing when we use our consumption to help those poor people‚ the rule apply to you is not the same as the rule apply to those people. The demand is different is different and hence the definition of satisfied utility is also different under
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Chapter 2 1. A consumer prefers more to less of every good. Her income rises‚ and the price of one of the goods falls while other prices stay constant. These changes must have made her better of. TRUE 2. A decrease in income pivots the budget line around the bundle initially consumed. FALSE 3. If all prices are doubled and money income is left the same‚ the budget set does not change because relative prices don ’t change. FALSE 4. If all prices double and income triples‚ then the
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will apply the different steps of the Utility Test and I shall apply this comparative approach to the study of the Common-Good Test. Although my judgments are implicitly concerned with generalizing the ethical issues of the case‚ I shall criticize the utilitarianism; the view that the best decision is the one that maximizes the expected utility over those who are affected Baron 1990). In addition‚ the paper shall inform as well as to which approach‚ the Utility Test‚ or the Common-Good Test best evaluates
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several items belonging to their inventories within the company’s webpages. We show that the ability to arbitrarily partition a website among items leads to a comparative advantage among webpages which can be exploited so as to maximize the total utility of the enterprise. This result‚ which also applies to the case of several competitive providers‚ is then extended to dynamical scenarios where both the advertising allocation and the exposure levels vary with time. 1 Introduction A distinguishing
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The standard textbook model of consumer is an outstanding example of the neoclassical paradigm in economics [1]: a h y p e r-rational agent maximises something by choosing an "optimal" bundle of things. Here‚ the hyper-rational consumer maximises utility (i. e. an overall generic measure of well-being) by exhausting a given budget. He has a pre-defined income to spend on - for simplicity ’s sake - two goods‚ called X and Y‚ respectively. He could spend his entire income buying only X‚ thus purchasing
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is the basic decision rule of rational choice theory? What are utilities and disutilities? The basic decision rule of rational choice theory is that to choose the behavior that is expected to maximize (that is‚ produce the most) utility and/or minimize (that is‚ produce the least) pain. Rational choice theory behaviors are driven by thoughts about future consequences. People do whatever they think will produce the most utility or least disutility. Rational choice theory says that all behavior
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Trouble arises when I prefer staying in to sunbathing‚ sunbathing to short exposure and short exposure to staying in. These are inconsistent preferences and in combination‚ are irrational. Isolated‚ they are defensible. Decision theory: You have a utility function‚ which assigns real numbers to outcomes‚ propositions‚ states or affairs. Ordering Conditions • (1) If xPy‚ then not yPx. • (2) If xPy‚ then not xIy. • (3) If xIy‚ then not xPy‚ and also not yPx. • (4) xPy or yPx or xIy‚ for all relevant
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them together. Handwritten submissions are not accepted. 1. Consider a consumer with cuasi-linear preferences represented by the utility function: U c‚ g c 3 g where c is a private good and g is a pure public good. The price of the private good is $12 per unit and the price of the public good $1. Assume the consumer has $1‚000 to spend. Calculate the utility maximizing quantities of c* and g*. Answer: Max U c‚ g c 3 g s.t. 12c g 1000 c0 g0 L c 3 g 0 1000 12.c
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