Utility and society outside perception o what others

Utility and Society
 Outside Perception
o What others think of your purchases
o How much others have
 Inward preferences
o How you prefer to spend money
Utility, Altruism, and Reciprocity
Both contribute to
decision-making

 Reciprocity : responding to another’s action with a similar action
Example Homework Problems (Chapter 7)
 Total utility is maximized when marginal utility becomes ______.

Petra has $520 to spend on DVDs and books. A book costs $25 and a DVD costs $20.
a. Write an equation for the budget constraint. Let x = books. Let y = DVDs.
.
b.
Use your equation to determine how many books Petra can buy if she buys 6 DVDs.

For which of the following goods is the utility you get from consuming them likely to be affected by
the opinions of others?
A. MP3
B. New Car
C. Running Shoes
D. New laptop for Class

Say whether each of the following situations is an example of altruism or reciprocity.
a. Giving a few canned goods to the local food bank for its annual food drive:
b.
Helping someone move her couch after she helped you study for an upcoming exam
c.
The biological relationship between cleaner fish and large predators in the ocean, in which
cleaner fish keep the predator free from parasites and the predator keeps the cleaner fish safe