ECON 201 Lecture 39: Drop Unhealthy Spending Habits

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periwinklemammoth360

10 Aug 2020

School

Ball State University

Department

Economics

Course

ECON 201

Professor

Jonathan Lamb

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Document Summary

They are expenditures that hurt you monetarily and physically. It"s easy to get hooked on unhealthy spending habits as you begin your adult life. You can analyze things when you look at how you spend each week. For example, you can see how many times you buy beer a week or how often you eat at restaurants per week. If you find that you eat at restaurants very often, if you eliminate something from your purchase, like soda, from the restaurant, you can eliminate unhealthy spending a week. If you drop the soda, you eliminate a week, which is a year. You"ll make your own personal decisions, though, based on your preferences. You are the only person who can judge you on your choices in the end. Know what your monthly bills are, and make action when they are increased. It"s easy to stop your bills from creeping on you every year.

Related Questions

1. Use the table below for the following question. Suppose you have a budget of $6 and that brownies and Twizzlers cost $1 each. What is the consumer optimum?

Number of Brownies	Total Utility of Brownies	Marginal Utility of Brownies	Number of Twizzlers	Total Utility of Twizzlers	Marginal Utility of Twizzlers
0	0	-	0	0	-
1	10	10	1	6	8
2	19	9	2	13	7
3	26	7	3	19	6
4	30	4	4	23	4
5	30	0	5	25	2
6	29	-1	6	25	0

6 brownies

3 brownies and 3 Twizzlers

4 brownies and 2 Twizzlers

any combination of 6 because they're both $1

2. Use the table below for the following question. What is the consumer equilibrium for a $6 budget if the price of brownies rises to $1.50 and the price of Twizzlers remains at $1.00?

Number of Brownies	Total Utility of Brownies	Marginal Utility of Brownies	Number of Twizzlers	Total Utility of Twizzlers	Marginal Utility of Twizzlers
0	0	-	0	0	-
1	10	10	1	6	8
2	19	9	2	13	7
3	26	7	3	19	6
4	30	4	4	23	4
5	30	0	5	25	2
6	29	-1	6	25	0

The consumer will buy all Twizzlers because they're cheaper.

4 brownies

3 Twizzlers and 2 brownies

3 brownies and 3 Twizzlers

3. At Nice Price for the Ice, an ice cream parlor, customers routinely buy a scoop of ice cream for $3. If consumers purchase one scoop of ice cream at $3, then why don't they keep buying more and more scoops for $3 until the store sells out?

People would not want more than one scoop of ice cream because then they would have less money to spend on other goods.

People do not want to consume all the scoops of ice cream because their total utility is higher the less they eat.

At some point, customers do not value an additional scoop at $3, so they will not pay $3 for a scoop after they reach that point.

4. Suppose you plan on eating 50 potato chips. As you start consuming potato chips, your marginal utility is very high, but it begins to fall slowly until you've eaten 10 chips. After you have eaten 10 chips, your marginal utility decreases even faster with each additional chip. The marginal utility continues to decline until you've eaten 49 chips. The fiftieth chip does not give you any additional utility. After 50 chips, your mouth gets so salty that it's unpleasant to eat anymore, so marginal utility is actually negative for those chips. How many chips should you eat in order to maximize your total utility?

5. As you start consuming potato chips, your marginal utility is very high, but it begins to fall slowly until you've eaten 10 chips. After you have eaten 10 chips, marginal utility decreases even faster with each additional chip. The marginal utility continues to decline until you've eaten 49 chips. The fiftieth chip does not give you any additional utility. After 50 chips, your mouth gets so salty that it's unpleasant to eat anymore, so marginal utility is actually negative for those chips. How many chips should you eat in order to maximize your marginal utility?

6. At current levels of consumption, Alice is spending her entire budget. If Alice gets 3 utils of satisfaction per dollar spent on ice cream and 2 utils per dollar spent on shampoo, then how should she adjust her consumption to get closer to the consumer optimum?

She is already at the consumer optimum, so no adjustment is necessary.

She should buy more ice cream and less shampoo.

She should buy more shampoo and less ice cream.

She should buy more of both goods.

7. Suppose you are at a restaurant and your favorite dish costs $20. You can get your next-favorite dish for $17. If your next-favorite dish gives you 100 utils, how many additional utils do you need from your favorite dish to spend the extra $3?

17.65

117.65

8. The diamond water paradox is the observation that water is essential to life and inexpensive, while diamonds are not essential and are highly-priced. Which of the other pairs of goods exhibit a pricing structure similar to water and diamonds?

economy & luxury cars

rice & truffles (very expensive mushrooms)

paper clips & gasoline

paper & textbooks

9. Rice is a cheap staple food eaten several times a day by many people all over the world. In Trufflelandia, residents also eat expensive mushrooms known as truffles once every year as a birthday celebration. Rice keeps the people alive and truffles are not necessary for sustaining their lives. Why is rice so cheap and truffles so expensive?

Truffles taste better, so they are worth more money.

Rice is easy to cook, so people buy a lot of it. If people are going to buy so much, then it has to be cheap.

Truffles are more nutritious, and healthy food is always more expensive than unhealthy food.

People eat so much rice that an additional serving of rice has little marginal value, but the marginal value of another serving of truffles is very high.

oliverat570

Instructions: Review and respond to at least two of your classmates' posts by sharing any ideas you may have about how households and businesses can protect themselves against inflation.

Please help with a response to the following:

The government tries to restrain inflation because it causes an unintended and undesirable redistribution of income and wealth (Amacher, Pate 2012). That is when a lender who is in the driver's seat when providing a loan to a person can charge a low-interest rate to entice people to borrow money at that low rate. Now if the Feds were to raise the interest rate even a quarter of a percent this could turn the tables from the lender over to the borrower. In the first scenario, the Lender will make a small profit over the long term with the low-interest rates. If the nation's interest rate increases, the value of the dollar goes down and the Lender ends up making less back than they loaned. This causes the redistribution of the income to favor the borrower.

Once inflation starts to happen it is a trickle-down effect on the consumer in the long run. Eventually, the consumer will start to pay inflated rates in some way through the goods and services they purchase. Those that are on fixed incomes will be adversely affected because as their income does not increase but the cost of goods does, they will have to find ways to cut their spending in order to make ends meet. This could be done without eating out as often, buying cheaper and fewer quality foods, or shopping at lower quality stores just to save the extra dollars that inflation has cost them. People who are on fixed incomes have to become more creative in order to still enjoy some qualities in life when times get tight.

viridianfrog614

Economics is nothing more than the study of scarcity and choice. It's called the Economizing Problem.

Economics is also the study of human action---why people make the choices they do.

We have finite (limited) resources and infinite (unlimited) demand for goods and services. We must, therefore, use rational decisions as to how to allocate these resources so that we can produce the goods and services that satisfy as many needs and wants as possible.

Needs are those things that make life possible---food, clothing, shelter, etc. Wants are the things that make life easier---glass in windows, carpet on the floor, a refrigerator to keep your beer cold, etc.

The resources we are trying to use wisely are not confined to money. We are talking about talent, ability, drive, ambition, etc. We can't all be brain surgeons. Nor would most of us want to be. We have different needs and wants that drive our ambitions. I have 5 grandchildren. The oldest two are twins---a boy and a girl. My granddaughter graduated from Idaho University with a bachelor's and a master's degree in accounting in 5 years. She passed the CPA exam on the first try. She now lives in Panama and works for BMW. She speaks, reads, and writes 4 languages, including English. Her brother finally graduated from the University of Arkansas in May 2016 after 8 years! Why did it happen this way?? They were raised the same way by the same parents. Why was my granddaughter drove to succeed and my grandson so listless?

Then there is subjective valuation and opportunity cost. Opportunity cost is nothing more than what you have to give up to do something else. Some of you might have to roll out of the bar or the party a little before you wanted to leave just to be able to attend my class. You might also have to give up some precious sleep. In any event, you had to give up something to attend my class. That's the opportunity cost. Remember, everything you do has a price (opportunity cost) that must be paid according to Harry Browne who wrote, How I Found Freedom in an Unfree World.) To do one thing you must give up the opportunity to do something else.

When people decide to buy a product or service they must decide if it will satisfy a need or want at a price they are willing to pay. The number one reason that people buy the products or services they do is called Personal Tastes or Preferences (Subjective valuation). Everyone has a different price they are willing to pay for the same product or service. Something is only worth what someone is willing to pay for it. That's a subjective valuation. Each of us has a different intensity of demand for the same products. Things you want I may not care for at all, and the opposite may also be true. This is why there is such a variety of goods and services offered on the market.

Subjective valuation is also fluid. As your income goes either up or down it changes your valuation of products and services. Have you ever wanted something so bad you would do almost anything to get it---an i phone or I pad?---but once you get the money you think, "do I really want this?' and you don't buy it. This is common. If it were not for a subjective valuation we would all be wearing the same style and color clothes and living in similar houses, etc. Wouldn't that be a wonderful world! I'd find the tallest building in downtown Orlando and see if I could fly! It is not the similarity in people that interests me. It's the differences. It's my desire not to be like everyone else that has driven my life. Don't strive to be someone else. Strive to find and be yourself. God save me from a terminal case of conventional wisdom!

There are 5 embedded questions.

Give me an example of subjective valuation.

salmoneel837

ECON 201 Lecture 39: Drop Unhealthy Spending Habits

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