Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

John has two bottles of wine and two liters of cola. his friend Bill has one bottle of wine and 2 l of cola. information

image text in transcribed

John has two bottles of wine and two liters of cola. his friend Bill has one bottle of wine and 2 l of cola. information about their preferences and rankings are given below in the form of utility (happiness measured in "utils") data: A) Yes because he would lose 15 utils of total utility from wine but then have total utility of 15 units from having three colas B) no he would lose 15 utils from wine and only gain three utils from the extra cola C) Yes since he has two colas and only one wine he obviously prefers cola to wine D) no because his total utility from cola and wine would decrease from 27 utils to 12 utils

image text in transcribed
John's Utility (Happiness) Function Wine Cola Wine and Cola Bottles Total Marginal Liters of Total Marginal Total Utility of Wine Utility of Utility of Cola Utility of Utility of from John's Wine Wine Cola Cola Starting Stash of Wine and Cola 0 TU of 2 Wine 20 1 30 and 2 Cola = 38 25 W N 3 53 20 15 63 Bill's Utility ( Happiness) Function Wine Cola Wine and Cola Bottles Total Marginal | Liters of Total Marginal Total Utility of Wine Utility of Utility of Cola Utility of Utility of from Bill's Wine Wine Cola Cola Starting Stash of Wine and Cola 0 TU of 1 Wine 15 and 2 Cola= 4 Would it be rational for Bill to trade his battle of wine for a liter of John's cola? If so. why? If not, why not

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Macroeconomics Policy And Practice

Authors: Frederic Mishkin

2nd Edition

0133424316, 978-0133424317

More Books

Students also viewed these Economics questions

Question

=+12. a. Discuss the purpose ofthe cash budget.

Answered: 1 week ago

Question

An improvement in the exchange of information in negotiations.

Answered: 1 week ago

Question

1. Effort is important.

Answered: 1 week ago