Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 20, Problem 13QP
To determine
Identify the
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The law of diminishing marginal utility is consistent with the fact that people trade. Do you agree or disagree? Explain your answer.
Juanita is deciding whether to buy a suit that she wants, as well as where to buy it. Three stores
carry the same suit, but it is more convenient for Juanita to get to some stores than others. For
example, she can go to her local store, located 15 minutes away from where she works, and pay a
marked-up price of $102 for the suit:
Store
Local Department Store
Across Town
Neighboring City
Store
Local Department store
Juanita makes $42 an hour at work. She has to take time off work to purchase her suit, so each
hour away from work costs her $42 in lost income. Assume that returning to work takes Juanita the
same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer
the following questions, ignore the cost of gasoline and depreciation of her car when traveling.
(Just enter the whole dollar number, no units and no cents)
Across Town
Travel Time Each Way
(Minutes)
15
30
60
Neighboring city
Price of a Suit
(Dollars per suit)
102
Opportunity cost of
time…
If the price of restaurant meals is overall higher in big cities then you might expect young people in those cities to spend more on those meals as a percent of their income than similar people in the suburbs. The answer must then lie with the preferences of those young people with their utility curves. Do you think that people reveal their preferences in part by where they choose to live?
Chapter 20 Solutions
Economics (MindTap Course List)
Ch. 20.1 - Prob. 1STCh. 20.1 - Prob. 2STCh. 20.1 - Prob. 3STCh. 20.2 - Prob. 1STCh. 20.2 - Prob. 2STCh. 20.3 - Prob. 1STCh. 20.3 - Prob. 2STCh. 20 - Prob. 1QPCh. 20 - Prob. 2QPCh. 20 - Prob. 3QP
Ch. 20 - Prob. 4QPCh. 20 - Prob. 5QPCh. 20 - Prob. 6QPCh. 20 - Prob. 7QPCh. 20 - Prob. 8QPCh. 20 - Prob. 9QPCh. 20 - Prob. 10QPCh. 20 - Prob. 11QPCh. 20 - Prob. 12QPCh. 20 - Prob. 13QPCh. 20 - Prob. 14QPCh. 20 - Prob. 15QPCh. 20 - Prob. 16QPCh. 20 - Prob. 1WNGCh. 20 - Prob. 2WNGCh. 20 - Prob. 3WNGCh. 20 - Prob. 4WNGCh. 20 - Prob. 5WNGCh. 20 - Prob. 6WNGCh. 20 - Prob. 7WNG
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