Exam 7: Consumer Choice and Elasticity

At a price of $100,Beachside Canoe Rentals rented 11 canoes.When it increased its rental price to $125,9 canoes were rented.Calculate the absolute value of the price elasticity of demand for canoe rentals,using the midpoint formula.

Alan Krueger conducted a survey of fans at the 2001 Super Bowl who purchased tickets to the game for $325 or $400.Krueger found that (a)94 percent of those surveyed would not have paid $3,000 for their tickets,and (b)92 percent of those surveyed would not have sold their tickets for $3,000.These results are evidence of

Suppose the absolute value of the price elasticity of demand for basketball game tickets on your campus is greater than 1.Increasing ticket prices will increase the total revenue from ticket sales.

Which of the following does not explain why consumers buy products that many other consumers are already buying?

With the increased usage of cell phone services,what has happened to the price elasticity of demand for land-line telephone services?

Which of the following refers to the increase in the usefulness of a product as the number of consumers who use it increases?

What is the common feature displayed by the following items? a.eating in a newly opened "fusion" cuisine restaurant b.attending a Red Sox game in Fenway Park c.wearing Lucky Brand designer jeans

Which of the following statements is true?

Suppose Joe is maximizing total utility within his budget constraint.If the price of the last pair of jeans purchased is $25 and it yields 100 units of extra satisfaction and the price of the last shirt purchased is $20,then,using the rule of equal marginal utility per dollar spent,the extra satisfaction received from the last shirt must be

A budget constraint

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

Once a product becomes established,network externalities may create ________ costs that make consumers reluctant to buy a new product with better technology.

A newspaper story on the effect of higher milk prices on the market for ice cream contained The following: "As a result [of the increase in milk prices],retail prices for ice cream are up 4 percent from last year....And ice cream consumption is down 3 percent." Source: John Curran,"Ice Cream,They Scream: Milk Fat Costs Drive Up Ice Cream Prices," Associated Press,July 23,2001. Based on the information given,what is the price elasticity of demand for ice cream?

Table 7-5 Quantity of Burgers Marginal Utility Quantity of Pepsi Marginal Utility 1 20 1 30 2 14 2 10 3 10 3 7 4 3 4 5 5 1 5 1 6 -5 6 0 7 -10 7 -4 Table 7-5 lists Jay's marginal utilities for burgers and Pepsi.Jay has $7 to spend on these two goods. The price of a burger is $2 and the price of a can of Pepsi is $1. -Refer to Table 7-5.If Jay can eat all the burgers he wants for free,how many burgers will he consume?

Describe the demand curve for a Giffen good.

Assume that the market for barley is in equilibrium and the demand for barley is inelastic.Predict what happens to the revenue of barley farmers if a prolonged drought reduces the supply of barley.The drought will cause farm revenue to

Economists do not think it is possible to compare the relative utility that two people get from consuming an additional unit of a particular good.

Assume that you had a ticket for a basketball playoff game that you bought for $50,the maximum price you were willing to pay.If a friend of yours offers to buy the ticket for $100 but you decide not to sell it,how can your decision be explained?

The demand curve for a luxury good is upward-sloping.

The endowment effect suggests that that people