In planning your next vacation, you have narrowed your choices down to two packages offered by your travel agent, a week in Hawaii for $1200 or a week in Cancun for $900. You are indifferent between these choices. You see an ad in the travel section of the newspaper for a week in Hawaii, with accommodations identical to those offered by your agent, for $1300. According to the theory of rational choice, should the information in the newspaper ad influence your vacation plans? Explain.
Answer to relevant QuestionsMary will drive across town to take advantage of a 40 percent off sale on a $40 blouse but will not do so to take advantage of a 10 percent off sale on a $1000 stereo. Assuming that her alternative is to pay list price for ...Graph the short- run total product curves for each of the following production functions if K is fixed at K0 = 4.a. Q = F (K, L) = 2K + 3L. b. Q = F (K, L) = K2L2.The Philadelphia Police Department must decide how to allocate police officers between West Philadelphia and Center City. Measured in arrests per hour, the average product, total product, and marginal product in each of ...Why should the production of a fixed amount of output be allocated between two production activities so that the marginal cost is the same in each?A firm has a long- run total cost function: LTC (Q) = Q3 - 20Q2 + 220QDerive expressions for long-run average cost and marginal cost, and sketch these curves.
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