Exam 7: Consumer Choice and Elasticity

Which of the following would be the best example of consumer surplus?

Scenario 7-1 Use the information below to answer the following question(s). JoAnn considers cola and plain sparkling water to be good substitutes. Suppose the price of sugar, a key ingredient used to produce cola, falls. Refer to Scenario 7-1. According to the income effect, which of the following is most likely to occur?

Bob goes out to dinner three times per week, usually either to the local steak house or a Chinese restaurant in town. If the steak house were to raise its prices, Bob would probably (1) be less inclined to eat at the steak house and more inclined to eat at the Chinese restaurant when he did go out and (2) eat out fewer times per week because at the higher prices he cannot afford to eat out as much.

Suppose there are only two goods, apples and oranges. What happens if the price of each good increases by 15 percent?

The schedule of the amount of a product that consumers would be willing to purchase at alternative prices during a specific time period is the

All else equal, if a firm raises its price by 20 percent and the firm's total revenue falls by 20 percent,

When the price of designer jeans goes from $85 to $60, the quantity demanded increases from 100,000 to 120,000. Over this price range, the

If the price elasticity of demand for grapes was 2.5,

If the demand for cigarettes is highly inelastic, this indicates that

Which of the following describes a situation in which demand must be elastic?

Figure 7-15 Refer to Figure 7-15. Along which of these segments of the supply curve is supply least elastic?

If a 30 percent decline in the price of gasoline leads to a 15 percent rise in expenditures on gasoline, the price elasticity of demand for gasoline in this range must be

New York City increased regulated taxi fares by 17.5 percent and expected taxi revenue to increase by the same amount. The taxi commission believed taxi demand was

If a 50 percent increase in the price of hula hoops led to a 10 percent reduction in the quantity of hula hoops purchased, the price elasticity of demand is

If Jane's marginal benefit as a consumer in the jeans market is larger than the price of a pair of jeans,

Suppose the value of income elasticity of demand for a private college education is equal to 1.5. This means that

If the price of Pepsi-Cola increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the Pepsi-Cola Company could increase its total revenue by

Which of the following describes a situation in which demand must be inelastic?

The market demand for an item is

A perfectly inelastic demand curve indicates that