Exam 7: Consumer Choice and Elasticity

Table 7-9 Price per Pound (dollars) Quantity of Cheese Demanded (pounds) \ 16 3 14 4 12 5 10 6 8 7 6 8 4 9 2 10 -Refer to Table 7-9.Over what range of prices is the demand inelastic?

Figure 7-3 -Refer to Figure 7-3.A perfectly elastic demand curve is shown in

Suppose when Nablom's Bakery raised the price of its breads by 10 percent,the quantity demanded fell by 15 percent.What was the effect on sales revenue?

Jenna runs a small boutique in Capitola.She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more.On the basis of this information,what can you conclude about her price elasticity of demand for wool hand warmers?

Most people buy salt infrequently and in small quantities.Even a doubling of the price of salt is likely to result in a small decline in the quantity of salt demanded.Therefore

Jaycee Jeans sold 40 pairs of jeans at a price of $40.When it lowered its price to $20,the quantity sold increased to 60 pairs.Calculate the absolute value of the price elasticity of demand.Use the midpoint formula.

Costs that have already been incurred,and which cannot be recovered,are known as

The quantity demanded of tickets to the Super Bowl is always greater than the than the quantity supplied.Which of the following in the best explanation why the National Football League does not raise the price of tickets to the level where the quantity demanded equals the quantity supplied?

A new area of economics studies situations in which people appear to be making choices that do not appear to be economically rational.This area is called

If demand is perfectly inelastic,the absolute value of the price elasticity of demand is

Marv Pilson has $50 worth of groceries in a shopping cart at his local Shop 'n Save.Assume that the marginal utility per dollar of the liter bottles of soft drink in Marv's cart equals 50.The marginal utility per dollar of the boxes of cereal in Marv's cart equals 20.Marv has only $50 to spend,but has not yet paid for his groceries.How can Marv increase his total utility without spending more than $50?

The income effect of a price increase for a Giffen good outweighs the substitution effect.

Suppose the value of the price elasticity of demand is -3.What does this mean?

Explain the concept of network externalities.

Jonah lives in a small town where there is only one Mexican restaurant.Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant?

Which of the following is likely to occur as the result of the law of diminishing marginal utility?

For each pair of items below determine which product would have the higher price elasticity of demand (in absolute value). a.Blood pressure medicine for someone who has high blood pressure and the purchase of Clairol hair coloring product. b.A new Ford Fusion or a tank of gas for your current car. c.A Seiko watch or watches in general.

A sunk cost is a cost that has already been paid and cannot be recovered.

Some economists have argued that path dependence and switching costs can lead to market failure.Which of the following is an example of this argument?

After getting an A on your economics exam,you decide to go to your favorite Mexican restaurant to celebrate.You are having trouble deciding whether to order the chipotle chicken chimichanga or the cilantro seafood enchiladas.Use the rule of equal marginal utility per dollar to determine which one to purchase: (a)the chimichanga for $8 which gives you 120 units of utility,or (b)the enchiladas for $15 which gives you 195 units of utility?