Question 1

Online dating sites are an attempt to

Accepted Answer

Online dating sites aim to reduce the marginal cost of searching for love by making it easier and more convenient for individuals to find potential partners through the use of technology and algorithms. This can reduce the time, effort, and money required to find potential partners in person, increasing the likelihood of successful matches.

Question 2

The marginal cost of collecting information

Accepted Answer

As more information is collected, the marginal cost of collecting additional information increases due to the need for more resources such as time, money, and effort.

Question 3

The probability of earning a score of 90 on this test is 20%,the probability of earning a score of 80 is 60%,and the probability of earning a score of 70 is 20%.The correct formula for the expected value of this test is thus

Accepted Answer

The formula for the expected value is (probability of outcome 1 x value of outcome 1) + (probability of outcome 2 x value of outcome 2) + ... + (probability of outcome n x value of outcome n). Using the given probabilities and scores, the expected value can be calculated as (0.2)(90) + (0.6)(80) + (0.2)(70).

Question 4

The probability that Juanita will like the movie she is going to see is 90% and has a value of $40.Not liking the movie has a value of -$10.The expected value of going to the movie is

Accepted Answer

The expected value is calculated by multiplying each outcome by its probability and summing the results: (0.9 * $40) + (0.1 * -$10) = $36 - $1 = $35.

Question 5

Vinnie is looking for an apartment in Regina.In Regina,75% of the two-bedroom,one-bath apartments cost $800 a month and 25% cost $600.Vinnie would prefer to find an apartment that rents for $600.The marginal cost of looking at the first apartment is $15,the marginal cost of looking at the second apartment is $30,and so on.
-Refer to the information above.At most,Vinnie will be willing to look at _____ apartments.

Accepted Answer

Vinnie will be willing to look at apartments until the marginal cost of looking exceeds the expected savings. The expected savings from finding a $600 apartment is $200 (the difference between $800 and $600). The marginal costs are $15 for the first, $30 for the second, and $45 for the third. The total cost for looking at three apartments is $90, which is less than the $200 savings. However, looking at a fourth apartment would cost an additional $60, totaling $150, which is still less than $200, but the question asks for the maximum number of apartments he is willing to look at before the cost exceeds the savings. Therefore, the correct answer is 3.

Question 6

The reason that landlords and tenants sign lease agreements is to

Accepted Answer

The answer of The reason that landlords and tenants sign...

Question 7

The optimal amount of information to obtain for any purchase is

Accepted Answer

It is important to obtain some amount of information before making a purchase, but the optimal amount is where the marginal benefit of obtaining more information is equal to the marginal cost of obtaining that information. This ensures that the additional information obtained provides enough value to justify the cost of obtaining it. The optimal amount of information may vary depending on the size of the expenditure and the specific circumstances of the purchase. Simply relying on advice from friends and family may not provide a comprehensive understanding of the purchase and may be biased.

Question 8

Vinnie is looking for an apartment in Regina.In Regina,75% of the two-bedroom,one-bath apartments cost $800 a month and 25% cost $600.Vinnie would prefer to find an apartment that rents for $600.The marginal cost of looking at the first apartment is $15,the marginal cost of looking at the second apartment is $30,and so on.
-Refer to the information above.Suppose that Vinnie discovers that the marginal cost of looking at an extra apartment is $25,rather than $15.He will now look at a maximum of __________ apartments.

Accepted Answer

Since Vinnie would prefer to find an apartment that rents for $600, he will only look at the 25% of the apartments that cost $600. The marginal cost of looking at each apartment increases from $15 to $25, which means Vinnie is willing to look at fewer apartments to keep his search costs down. To find the maximum number of apartments Vinnie will look at, we need to determine the point where his marginal benefit equals his marginal cost. Since the search costs increase by $10, Vinnie will look at two additional apartments: 
$600 apartment #1 = $15 MC
$600 apartment #2 = $25 MC
At this point, Vinnie's marginal cost exceeds his marginal benefit, so he will stop searching. Therefore, the maximum number of apartments Vinnie will look at is 2.

Question 9

In the context of search theory,the legal contract of marriage exists to

Accepted Answer

The legal contract of marriage exists to solve the commitment problem in the context of search theory. By making a formal commitment to one partner, individuals are able to effectively search for and invest in a long-term relationship without the fear of being left behind by a potentially better partner. Religious requirements, making men and women respectable, stifling the growth potential of women, and ensuring reproduction may be associated with marriage in some cultures or historical contexts, but they do not address the commitment problem that marriage aims to solve in the context of search theory.

Question 10

Vinnie is looking for an apartment in Regina.In Regina,75% of the two-bedroom,one-bath apartments cost $800 a month and 25% cost $600.Vinnie would prefer to find an apartment that rents for $600.The marginal cost of looking at the first apartment is $15,the marginal cost of looking at the second apartment is $30,and so on.
-Refer to the information above.The expected benefit to Vinnie of searching for an apartment is

Accepted Answer

The answer of Vinnie is looking for an apartment in...

Question 11

Given the functions for the marginal cost and marginal benefit of collecting information,

Accepted Answer

The best choice is D, where the equilibrium is somewhere between complete ignorance and becoming an expert. This is because there is a cost and a benefit to collecting information - the more information you have, the more likely you are to make an informed decision, but there is also a cost in terms of time and effort spent gathering that information. At some point, the benefit of collecting more information will diminish and the cost will increase, leading to an equilibrium where consumers have gathered enough information to make an informed decision, but not so much that the cost outweighs the benefit.

Question 12

Bob is risk-averse and needs to hire an attorney.If the cost of searching is zero,Bob should

Accepted Answer

Bob should continue searching if the expected value of another interview is positive, as this would potentially lead to a better outcome than the current option.

Question 13

If the expected value of the next apartment in a search is zero,then

Accepted Answer

The answer of If the expected value of the next...

Question 14

Calculating the expected value of an outcome is necessary when the outcome

Accepted Answer

Calculating the expected value is necessary when the outcome is uncertain, as it allows for a prediction of the average value or outcome that can be expected given a certain set of circumstances or probabilities.

Question 15

Vinnie is looking for an apartment in Regina.In Regina,75% of the two-bedroom,one-bath apartments cost $800 a month and 25% cost $600.Vinnie would prefer to find an apartment that rents for $600.The marginal cost of looking at the first apartment is $15,the marginal cost of looking at the second apartment is $30,and so on.
-Refer to the information above.Suppose that Vinnie discovers that the distribution of high-price versus low-price apartments is not 75% and 25%,but 60% and 40%.He will now be willing to look at a maximum of __________ apartments.

Accepted Answer

With a 40% chance of finding a $600 apartment, Vinnie will calculate the expected cost of searching. The marginal cost of looking at apartments increases, so he will stop when the expected benefit (finding a $600 apartment) equals the marginal cost. Calculating for each apartment: 1st ($15), 2nd ($30), 3rd ($45), 4th ($60), 5th ($75). The expected benefit of finding a $600 apartment is $200 (difference between $800 and $600). By the 5th apartment, the marginal cost ($75) is still less than the expected benefit, so he will look at 5 apartments.

Question 16

The difference between the decision to eat another apple and the decision to look at another apartment is that

Accepted Answer

The benefit of looking at another apartment is uncertain because it involves various factors like location, price, and personal preferences, which may not be immediately clear.

Question 17

The optimal number of searches

Accepted Answer

The optimal number of searches increases for goods with large price variations because the potential savings from finding a lower price outweigh the costs of additional searches.

Question 18

In any situation where searching is required,it is likely that

Accepted Answer

The commitment problem refers to the issue of consumers not being able to trust that producers will provide accurate information about their products. As a result, consumers may be hesitant to search for information and instead may rely on incomplete or potentially biased information. Agreements, either formal or informal, can help to mitigate this problem and encourage consumers to search for information without fear of being misled. Therefore, C is the best choice as it addresses a potential solution to the problem rather than focusing on consumer behavior or producer actions.

Question 19

Vinnie is looking for an apartment in Regina.In Regina,75% of the two-bedroom,one-bath apartments cost $800 a month and 25% cost $600.Vinnie would prefer to find an apartment that rents for $600.The marginal cost of looking at the first apartment is $15,the marginal cost of looking at the second apartment is $30,and so on.
-Refer to the information above.The marginal cost of looking at the fourth apartment is

Accepted Answer