Essay about Consumer Theory and Relevant Property Rights

Submitted By baixuefei0524
Words: 1486
Pages: 6
Open Document
MASTER OF MANAGEMENT AND PROFESSIONAL ACCOUNTING
MGT 1210 ASSIGNMENT #1
SUMMER 2013
Prof. V. Aivazian

QUESTION 1

a) His cost of playing golf is not $10 per week. We need to add the opportunity cost, which is 30*3*4=360. And the total cost is 370. b) One alternative brings 360 and the other brings 100.
The higher one is the opportunity cost. The total cost is still 370. c) Future potential benefit does not change the current cost, which is 500. So the cost of purchase is 500 d) Was the total social cost of this round of golf different from other rounds? Was Dr. Watson’s own cost of this round of golf different?
The total social cost of this round was different from others since this round added more social cost which were window damage. His own cost stayed the same.

QUESTION 2

This is an important distinction you should learn to recognize. a) Government regulation of the liquor industry has caused the price of liquor to be higher and the quantity supplied to be lower than it would have been in the absence of regulation. This is positive. b) Economic theory is based on human behaviour. This is positive. c) A 5% GST should be imposed on all items sold in Canada. This is normative since there is value judgment. d) First-come, first-served methods of allocation discriminate against individuals whose time is valuable. This is positive. e) The use of violence should be outlawed, since it discriminates in favour of the strong and aggressive.
This is normative since there is value judgment.

QUESTION 3
Suppose that initially A is consuming 1 unit of X and 7 units of Y while B is consuming 8 units of X and 4 units of Y. a) Show that mutually advantageous exchange can occur. If the exchange rate is 1:1, then A would like to pay 1 Y to get 1 X from B since the total utility increases by 14-12=2. And B would like to do this since his utility increase by 20-2=18. b) How far will exchange proceed between A and B if the exchange rate is originally set at 1X = 1Y.

In that case, trade happens for one time. If A exchanges again, his utility will decrease by 14-12=2. So A would not exchange.

c) When exchange comes to an end at the rate of 1X = 1Y, could exchange continue by setting a new exchange rate at 2X = 1Y? How far will exchange go?

In that case, the utility of A would increase by 12+10-14=8. And utility of B would increase by 16-8-4=4. Again it is win-win situation. So exchange would happen. After that, if the exchange continues, the utility of A would decrease by 16-6-8=2. So the exchange would only go for once.

| Individual A | Individual B | Q | MUX | MUY | MUX | MUY | 1 2 3 4 5 6 7 8 | 16 14 12 10 8 6 4 2 | 24 22 20 18 16 14 12 10 | 22 18 16 12 10 8 4 2 | 32 28 24 22 20 16 12 8 |

QUESTION 4

Suppose the marginal value of bread in terms of wine is ½ bottle of wine per loaf of bread, while the relative price of bread in terms of wine is ¼ bottle of wine per load of bread. Explain how the consumer can adjust his purchases to raise his level of satisfaction.

We can see that MUb/ Pb=1>MUw/Pw=1/2. So the consumer would consume more bread until MUb/Pb decreases to the value that equals MUw/Pw.

QUESTION 5

A consumer suddenly realized the MUx/Px < MUy/Py with his current commodity bundle. Is he maximizing his utility? If not, which commodity should he consume more of, to improve utility, without increasing total expenditure? What happens to the MU/P ratio for each good as he begins to adjust consumption? Why?

Utility is maximized only when MUx/Px=MUy/Py
He would consume more Y and less X so that MUx/Px would go up and MUy/Py would go down.
The price
Show More

Related Documents: Essay about Consumer Theory and Relevant Property Rights

World Ecomoy Essay

development Alesina and Ardagna basically said there would no recession as a result of austerity as it would increase business and consumer confidence stimulating spending. Reinhart and Rogoff suggest that at 90% of debt there will be significant consequences on future growth - Causality problems Krugman and the Keynesians v AA + RR Alesina – Ardagna Paper not relevant to current crisis – the examples of successful austerity based fiscal adjustment carried out in a different world economy enviroenmnt…

Words 587 - Pages 3

Governance: Tort and Self Regulation Essay

Concept of governance meaning, elements and what amounts to good governance Corporate governance – internal organisation and management of a company – – – – • Key aspects of accountability, transparency Main theories – principle/agent approach Stakeholder theory Corporate governance in UK Cadbury 1992 to UK Combined Code 2010 Key factor – primarily internal control and self regulating codes of conduct. Critique – impact/effect of process Regulation of Business Outline …

Words 729 - Pages 3

Pols 237 Marx Essay

world at those times. They were relevant at the time and still carry great influence. Marx position on property rights and his feelings about abolishing private property may be controversial but to this day still carry some relevance. And they may not always be well received; they may just be the answer to many of the economic problems facing the struggling economies of the world today. This essay will outline a brief history of capitalism with regards to Marxist theory. In addition it will examine…

Words 2433 - Pages 10

Essay on Does the Capitalist Free Enterprise System Improve Justice in Society

environment. As competition intensified, the rule of competition is violated by the behaviours of creation of monopoly power to overcome rivals or collusion of companies to exploit the consumers in order to maximize the profits. The small companies are struggling to survive in a monopolised market while consumers are not able to make the optimal choice regarding quality and price because of the lack of comparison in the market. In order to increase shareholder’s return and reduce cost, it becomes…

Words 2170 - Pages 9

the essay of life

received by resource owners in the productive process. Theory of the firm and pricing in different types of market organization with varying degrees of competitive conditions. IV Prerequisites: ECON 101 and ECON 102 V Aims of the Course: Microeconomics is the study of how consumers and firms balance costs and benefits in making decisions and how those decisions determine outcomes in markets. Students will learn the basics of microeconomic theory and how to use economic models to analyze real world…

Words 1189 - Pages 5

Essay on global marketing

Victor V. Cordell MONTEREYINSTITUTEOF INTERNAnONAL STUDIES Nittaya W o n g t a d a NAtiONALINSnTUTEof DEVELOPMENT ADMiNiSTRATiON,BANGKOK,THA~U~ND AND Robert L. Kieschnick, Jr. FEDERALCOMMUNICATIONS COMMISSION This study hypothesizes that consumers' willingness to purchase counterfeit products is positively related to product performance expectations and negatively related to attitudes toward lawfulness. Support was found for the latter and mixed support for the former. Contingent hypotheses…

Words 9806 - Pages 40

Essay on Factors Effecting Price of Gold

balanced, informed decisions, and attempting to explain why they occur. An important hypothesis is understanding certain irrational decisions is “The endowment effect” hypothesis; a theory that states that people value a good more once it has been established as theirs. It says that once a person establishes “property rights” on a good, their willingness to retain the particular good (the value at which they may wish to sell it) is greater than the price they were willing to pay to obtain the good in…

Words 1171 - Pages 5

Real Estate Essay

Work in the real estate industry CPPDSM4080A Edition 2 Assignment 2 (TVET) STUDENT NAME Daniel Skrzypek OTEN NUMBER N855096 Please read the “Guide to completing and submitting assignments” before you begin this assignment. What you need to do To successfully complete this assignment you must answer the following questions to demonstrate your knowledge. The assignment will be granted a result of “Competent” if the learning outcomes are achieved or “not yet competent”…

Words 6817 - Pages 28

Pre-Trail Litigation: Pleadings, Discovery, Pretrial Motions, And Settlement

Physical/mental Examination: court-ordered exam of a party before trial for the extent of the alleged injuries Pretrial motions: Motion a party can make to dispose of a lawsuit Production of Documents: request by 1 party to produce all documents relevant to the case prior to trial Rebuttal: After defendant, the plaintiff can call witnesses to rebut the defendant’s case Re-direct examination: plaintiff attorney asks defendant witness Q’s Rejoinder: Defendant calls more witnesses to counter rebuttal…

Words 2988 - Pages 12

Essay on Ibus 300 Notes

International Business * Opening Case: Exporting used batteries to Mexico * Business Ethics- accepted principles of right or wrong governing the conduct of businesspeople * Ethical Strategy- a course of action that does not violate a company’s business ethics * Ethical Issues in International Business * Employment practices * Nike * Human rights * General Motors in South Africa * Environmental Pollution * Global tragedy of the commons-…

Words 2884 - Pages 12