Exam 10: Consumer Choice and Behavioral Economics

-Refer to Table 10-4. For steak and cheese sandwiches and grilled chicken sandwiches, the table contains the values of the marginal utility (MU) and marginal utility per dollar (MU/P) for Mabel Jarvis. Mabel has $14 to spend on steak and cheese sandwiches and grilled chicken sandwiches. Which of the following statements is false?

-Refer to Figure 10-5. What is the marginal rate of substitution for one bar of chocolate between g and h?

Which of the following statements is correct?

By reserving half of the tickets available for her 2018 Reputation concert tour for sale to people registered as "verified fans", Taylor Swift hoped to

-Refer to Figure 10-5. What is the marginal rate of substitution for one bar of chocolate between h and j?

All of the following are key trends that have hurt department stores except

Lilly Davis has $5 per week to spend on any combination of ice cream and candy. The price of an ice cream cone is $2 and the price of a candy bar is $1. The table below shows Lilly's utility values. Use the table to answer the questions that follow the table. a. Complete the table by filling in the blank spaces. b. Suppose Lilly purchases 2 ice cream cones and 1 candy bar. Is she consuming the optimal consumption bundle? If so, explain why. If not, what combination should she buy and why?

The use of celebrity endorsements can increase brand recognition and sales, but partnering with the wrong celebrity can have a negative impact on a company. Two recently successful partnerships are Under Armour's teaming with Dwayne Johnson for their Project Rock 1 sneaker that sold out in only 30 minutes following its release, and Coca-Cola partnering with Selena Gomez for its "Share a Coke and a Song" campaign. On the flip side, Nike, who signed an endorsement deal with Tiger Woods in 2000, saw sales fall by $1.7 million and lost over 100,000 customers when the company announced it was standing by the golfer following his infidelity scandal. The article discusses four tips on choosing the correct celebrity endorser: 1. Make sure the product actually fits the endorser. There needs to be consistency between the product and celebrity. 2. Make sure the product performs as advertised, or risk negative customer perception of both the product and the endorser. 3. Choose drama-free endorsers that fit the values of the company and are not involved in any type of scandal. 4. Avoid endorsers that promote anything and everything, as customers recognize authentic and unauthentic promotion. Source: Soline Demenois, "Why Celebrity Endorsement Works," therestlesscmo.com, October 17, 2019 -Refer to the Article Summary. One explanation for the increase in product sales because of celebrity endorsements, such as Selena Gomez's endorsement of Coca-Cola, is that people seem to receive ________ from goods they believe are popular.

The use of celebrity endorsements can increase brand recognition and sales, but partnering with the wrong celebrity can have a negative impact on a company. Two recently successful partnerships are Under Armour's teaming with Dwayne Johnson for their Project Rock 1 sneaker that sold out in only 30 minutes following its release, and Coca-Cola partnering with Selena Gomez for its "Share a Coke and a Song" campaign. On the flip side, Nike, who signed an endorsement deal with Tiger Woods in 2000, saw sales fall by $1.7 million and lost over 100,000 customers when the company announced it was standing by the golfer following his infidelity scandal. The article discusses four tips on choosing the correct celebrity endorser: 1. Make sure the product actually fits the endorser. There needs to be consistency between the product and celebrity. 2. Make sure the product performs as advertised, or risk negative customer perception of both the product and the endorser. 3. Choose drama-free endorsers that fit the values of the company and are not involved in any type of scandal. 4. Avoid endorsers that promote anything and everything, as customers recognize authentic and unauthentic promotion. Source: Soline Demenois, "Why Celebrity Endorsement Works," therestlesscmo.com, October 17, 2019 -Refer to the Article Summary. Economists refer to an increase in sales due to celebrity endorsements, such as Under Armour's sales increase from its partnership with Dwayne Johnson, as being the result of

Once a sports team signs a player to a guaranteed contract, the value of that contract becomes a nonmonetary opportunity cost.

Following the 2016 season, the San Francisco Giants signed pitcher Mark Melancon to a 4-year, $62 million contract. Melancon, who pitched poorly during 2017 and 2018, was still owed $28 million over the next two years, which the Giants would have to pay him even if they decided to release him to pursue potentially better pitchers. In making the decision whether to keep or release Melancon, the $28 million still owed to him

Wilbur Rickhiser, a financial advisor, recently told one of his clients: "The biggest mistake you can make is to hold onto a stock for too long in order to avoid a loss. Let's say you bought a stock for $50 per share but that six months later the price fell to $40 after a poor earnings report. Many of my clients in this situation will hold the stock, hoping the price will later rise above $50. In most cases like this the price does not rise and may even fall. You must know when to cut your losses." Which of the following is the best explanation for Rickhiser's advice?

Taylor Swift's approach to selling tickets to her 2018 Reputation concert tour resulted in

A study discussed in the Apply the Concept feature in the text found that there is ________ that some consumers are not well aware of prices, even for goods they buy regularly.

Arnie Ziffel has $20 per week to spend on any combination of pineapples and green tea. The price of a pineapple is $4 and the price of a bottle of green tea is $2. The table below shows Arnie's utility values. Use the table to answer the questions that follow the table. a. Complete the table by filling in the blank spaces. b. Suppose Arnold purchases 4 pineapples and 2 bottles of green tea. Is he consuming the optimal consumption bundle? If so, explain why. If not, what combination should he buy and why?

Following the 2016 season, the San Francisco Giants signed pitcher Mark Melancon to a 4-year, $62 million contract. Melancon, who pitched poorly during 2017 and 2018, was still owed $28 million over the next two years, which the Giants would have to pay him even if they decided to release him to pursue potentially better pitchers. The Giants decided to keep Melancon on their roster. If the Giants decision to keep him was based on the $28 million still owed, economists would say that the Giants

Consider the following hypothetical scenarios: Scenario A: You are about to purchase a pair of 7 for All Mankind jeans for $175 and a t-shirt for $45. The sales attendant at the store tells you that the pair of jeans you wish to buy is on sale for $160 at another store, located about a 20-minute drive away. Scenario B: You are about to purchase a pair of 7 for All Mankind jeans for $175 and a t-shirt for $45. The sales attendant at the store tells you that the t-shirt you wish to buy is on sale for $30 at another store, located about a 20-minute drive away. Based on standard economic theory, under which scenario would you make the 20-minute trip to the other store?

Table 10-2 above shows Keira's utility from soup and sandwiches. The price of soup is $2 per cup and the price of a sandwich is $3. Keira has $18 to spend on these two goods. -Refer to Table 10-2. Holding prices constant, when Keira's income changed from $18 to $23, what happens to her total utility and to the marginal utilities of the last cup of soup and the last sandwich purchased?

Which of the following describes the substitution effect of a price change?

-Refer to Table 10-3. The table above shows Lee's marginal utility per dollar from consuming ice cream cones and cans of Lime Fizz Soda. The price of an ice cream cone is $2 and the price of Lime Fizz Soda is $1. Use this information to select the correct statement.