Neil and Derek are brothers who are very fond of watching television. They share a television but watch different shows. Every evening after coming home from school, they argue over who will watch television and for how long
Irritated with their fight, their parents asked Neil to decide for how long each of them would watch television. They also told him that if the brothers failed to reach an agreement, they would not let either of them watch it. a) How should Neil make his decision? b) What will be the outcome if Derek prefers fairness over watching television?
a) Neil should make his decision using the technique of backward induction. Because Derek is fond of watching television, he will prefer a few hours of watching to not watching it at all. Therefore, he will always accept Neil's offer. Given that Derek will always accept his offer, Neil should offer the minimum number of hours to Derek.
b) If Derek prefers fairness over watching television, he will not accept an unfair allotment of hours to him. In this case, neither of them will get to watch television. If Neil knows that Derek prefers fairness, then Neil has an incentive to offer a more equal time split.
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Whether or not production is accompanied by an externality, a social planner who aims to maximize social surplus will always produce (assuming he does produce) where marginal social cost is equal to marginal social benefit.
Answer the following statement true (T) or false (F)
The collection and analysis of massive amounts of data, with the goal of measuring aspects of people's behavior is referred to as
A) mega processing. B) marginal utility. C) the Internet of Things. D) big data.
Profits
a. are what remains from the selling price after factors have been paid. b. accrue to entrepreneurs. c. are lower than most people think. d. All of the above are correct.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, Point F
A. is efficient and attainable. B. cannot be produced with the current state of technology. C. represents underallocation of resources. D. represents what the people want.