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ECO 211 HA6 - 4 hrs psychology 2 hrs economics(note to...

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Microeconomics 211 Chapter 6: Consumer Choice and Behavioral Economics HA 6 ( #1.3, 1.6, 1.10, 3.2) 1.3) Budget constraint refers to the limited amount of income you have available to spend on goods and services. The rule of equal marginal utility per dollar means that the consumer should make sure that the last dollar spent on a product should give them the same marginal utility. 1.6a) In this instance, I would say you should study 3 hours for each exam, since each hour is equal to only a change in 1 util. The optimal purchase, given the budget constraint of 6 hours is 3 hours of studying per exam. 1.6b) In this situation, I would study twice as long for the psychology exam as I would for the economics exam.
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Unformatted text preview: 4 hrs psychology, 2 hrs economics. (note to instructor: I had a hard time understanding the tables & formulas given in the textbook, the chapter notes from instructor & even the supplemental lecture. I am usually very competent in anything to do w/ math…but this was TOTALLY confusing.) 1.10) With the information given, we cannot make a decision because we are lacking the information on Mary’s budget constraint and the prices of the corn chips and sodas. 3.2) Consumers pay attention to celebrity endorsements of products because they believe the celebrities are knowledgeable about the products and that if they use the products, they will be seen as fashionable as the celebrities....
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