Exam 7: Consumer Choice and Elasticity

The demand for The Federalist Papers is likely to be more elastic than the demand for a best-selling mystery novel.

You are the manager of a theater.At present the theater charges the same admission price of $8 to all customers,regardless of age.You propose a two-tier pricing scheme: $5 for children under the age of 12 and $10 for adults.You tell your supervisor that your proposal is likely to increase revenues.What must be true about the price elasticity of demand if your proposal is to achieve its goal of raising revenue? Explain your answer.

If the slope of a demand curve is equal to -0.1 then

For consumers who opt to pay a $10 monthly fee to have unlimited texting on their cell phones,but choose not to pay a $5 monthly fee to have unlimited call minutes,the unlimited texting option has a ________ than the unlimited minutes option.

If at a price of $24,Octavia sells 36 home-grown orchids and at $30 she sells 24 home-grown orchids,the demand for her orchids is

You participate in a taste test for a new protein supplement called "Boost." You are given five consecutive one ounce vials of the supplement and after consuming each vial you are asked to note your reaction.You consume the first vial and your response is: "Hmmm,quite good!" After the second,you say,"Not bad at all." After the third,you note,"It's alright." and after the fourth you wince,"No more,the after-taste is getting to me.I need water." What economic principle does this scenario illustrate? Define the principle.

Which of the following statements about price elasticity of demand is false?

When there few close substitutes available for a good,demand tends to be

Utility is

Of the following,which is the best example of good with a perfectly inelastic demand?

In explaining consumer behavior economists explain how consumer tastes and preferences are formed.

The price elasticity of demand is equal to

Many airlines have not reduced or eliminated fuel surcharges despite the price of oil dropping.A logical reason for this is that the decline in fuel prices ________ the supply of airline tickets while at the same time the demand for airline tickets ________,so airline ticket prices still increased.

What is behavioral economics?

Table 7-2 Quantity of Soup (cups) Total Utility Quantity of Sandwiches Total Utility 1 40 1 45 2 60 2 75 3 72 3 102 4 82 4 120 5 88 5 135 6 90 6 145 Table 7-2 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 7-2.Suppose Keira's income increases from $18 to $23 but prices have not changed.What is her utility maximizing bundle now?

The income effect results in consumers increasing the quantity of normal goods demanded when the price falls.

If the demand for cell phone service is inelastic,then

In order to derive an individual's demand curve for salmon,we would observe what happens to the utility-maximizing bundle when we change

Under J.C.Penney's everyday low pricing policy,the everyday low prices

Most film processing companies have a policy of printing every picture on a roll of film and allowing customers to request a refund for pictures that were not clearly developed.The companies do this knowing that most customers do not ask for refunds.This is an example of consumers