Explain the difference between the two different models of choice and decision making seen in this class. We saw in Module 1 (Lecture 4, Making Optimal Decisions) that “how-much decisions” are a matter of finding an optimal quantity that maximizes a net-benefit, where a marginal benefit is equal to a marginal cost. How is the model of consumer choice different from this simple model of decision making? In what ways are the models of decision making similar? Or are they the same? And if they are the same, then what are the marginal benefits and marginal costs for the consumers in deciding their optimal bundle? What role does the budget play in the difference between these two models of decision making?
The difference between the price of one product and the total budget is referred to as a “util.” True False Pick only one of the questions below to answer. Be sure to answer with less than 3 paragraphs. If you wish to use graphs or tables, feel free to add them. 1. Explain the difference … Read more