Using Utility Analysis. Explain Each Statement Using Utility Analysis
1. At a study session before a midterm exam you heard four of your friends chatting:
Explain each statement, using utility analysis.
a.“I think Joshua paid too much for his backpack.”
--The speaker does not receive as many utils from shopping for backpacks as Joshua.
b.“I gave Eddie $20. He really needed it more than I do.”
--Money is not as important to this person, Eddie will get more utils out of each dollar then the person who gave him the money.
c.“I didn’t go to the concert last night because tickets were $30.”
--The concert was not going to generate enough utils for this person to spend their money on.
d.“I did. It was the best $30 I spent this semester.”
--This person got a high amount of utils from the concert.
Ok, I think question #4 is based off of question # 3. So question #3 is An auto mechanic says to you,“I know you like your car and derive great satisfaction driving it. But if I were you, I wouldn’t put another penny into it.” Explain his reasoning in terms of utility analysis. …show more content…
How can proponents of a more equitable distribution of income use the law of diminishing marginal utility of money to justify their position?
If someone has an even distribution of income and they really like driving their car (from question 3) then they would not be worried about how much money has to go into it. The will get more utility out of fixing that car then they would buying a new car. According to the law of diminishing marginal utility the more cars a person buys the less utility they receive (Gotthiel,
Explain each statement, using utility analysis.
a.“I think Joshua paid too much for his backpack.”
--The speaker does not receive as many utils from shopping for backpacks as Joshua.
b.“I gave Eddie $20. He really needed it more than I do.”
--Money is not as important to this person, Eddie will get more utils out of each dollar then the person who gave him the money.
c.“I didn’t go to the concert last night because tickets were $30.”
--The concert was not going to generate enough utils for this person to spend their money on.
d.“I did. It was the best $30 I spent this semester.”
--This person got a high amount of utils from the concert.
Ok, I think question #4 is based off of question # 3. So question #3 is An auto mechanic says to you,“I know you like your car and derive great satisfaction driving it. But if I were you, I wouldn’t put another penny into it.” Explain his reasoning in terms of utility analysis. …show more content…
How can proponents of a more equitable distribution of income use the law of diminishing marginal utility of money to justify their position?
If someone has an even distribution of income and they really like driving their car (from question 3) then they would not be worried about how much money has to go into it. The will get more utility out of fixing that car then they would buying a new car. According to the law of diminishing marginal utility the more cars a person buys the less utility they receive (Gotthiel,