Table 7-1 \[\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\ \text { Pita Wraps } \end{array} & \text { Total Utility } & \begin{array} { c } \text { Quantity of } \\ \text { Bubble Tea } \end{array} & \text { Total Utility } \\ \hline 1 & 60 & 1 & 40 \\ \hline 2 & 102 & 2 & 70 \\ \hline 3 & 132 & 3 & 91 \\ \hline 4 & 144 & 4 & 106 \\ \hline 5 & 144 & 5 & 112 \\ \hline 6 & 138 & 6 & 115 \\ \hline 7 & 128 & 7 & 115 \\ \hline \end{array}\] Keegan has $30 to spend on Pita Wraps and Bubble Tea.The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. Table 7-1 shows his total utility from different quantities of the two items. -Refer to Table 7-1.If Keegan can drink all the bubble tea he wants for free,how many glasses will he consume?

A) 4 glasses B) 5 glasses C) 6 glasses D) 7 glasses A) 4 glasses B) 5 glasses C) 6 glasses D) 7 glasses

Table 7-5 \[\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\ \text { Burgers } \end{array} & \begin{array} { c } \text { Marginal } \\ \text { Utility } \end{array} & \begin{array} { c } \text { Quantity of } \\ \text { Pepsi } \end{array} & \begin{array} { c } \text { Marginal } \\ \text { Utility } \end{array} \\ \hline 1 & 20 & 1 & 30 \\ \hline 2 & 14 & 2 & 10 \\ \hline 3 & 10 & 3 & 7 \\ \hline 4 & 3 & 4 & 5 \\ \hline 5 & 1 & 5 & 1 \\ \hline 6 & - 5 & 6 & 0 \\ \hline 7 & - 10 & 7 & - 4 \\ \hline \end{array}\] 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.What is Jay's optimal consumption bundle?

A) 1 burger and 2 Pepsis B) 2 burgers and 3 Pepsis C) 3 burgers and 1 Pepsi D) 3 burgers and 2 Pepsis A) 1 burger and 2 Pepsis B) 2 burgers and 3 Pepsis C) 3 burgers and 1 Pepsi D) 3 burgers and 2 Pepsis

Exam 7: Consumer Choice and Elasticity

Suppose the price of gasoline in July 2004 averaged $1.35 a gallon and 15 million gallons a day were sold.In October 2004,the price averaged $2.15 a gallon and 14 million gallons were sold.If the demand for gasoline did not shift between these two months,use the midpoint formula to calculate the price elasticity of demand.Indicate whether demand was elastic or inelastic.

(Essay)

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Question 121

Figure 7-5 -Refer to Figure 7-5.Using the midpoint formula,calculate the absolute value of the price elasticity of demand between e and f.

(Multiple Choice)

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Question 122

Table 7-1 Quantity of Pita Wraps Total Utility Quantity of Bubble Tea Total Utility 1 60 1 40 2 102 2 70 3 132 3 91 4 144 4 106 5 144 5 112 6 138 6 115 7 128 7 115 Keegan has $30 to spend on Pita Wraps and Bubble Tea.The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. Table 7-1 shows his total utility from different quantities of the two items. -Refer to Table 7-1.If Keegan can drink all the bubble tea he wants for free,how many glasses will he consume?

(Multiple Choice)

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Question 123

If a consumer always buys goods rationally,then

(Multiple Choice)

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Question 124

What is a Giffen good?

(Essay)

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Question 125

Many economists do not believe that network externalities lock consumers into the use of products that have technology inferior to other,similar products.These economists believe that

(Multiple Choice)

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Question 126

Suppose at a price of $50,Yoshi's Jazz Bar sells 20 tickets to its nightly jazz performance and at a price of $40,it sells 25 tickets.Based on this information,the demand for Yoshi's jazz performance is elastic.

(True/False)

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Question 127

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.What is Jay's optimal consumption bundle?

(Multiple Choice)

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Question 128

The demand curve for an inferior good can never be downward-sloping.

(True/False)

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Question 129

Economists Gary Becker and Kevin Murphy are associated with which of the following?

(Multiple Choice)

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Question 130

Behavioral economics refers to the study of situations

(Multiple Choice)

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Question 131

A demand curve that is horizontal indicates that the commodity

(Multiple Choice)

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Question 132

A linear downward sloping demand curve has price elasticities (in absolute values)that

(Multiple Choice)

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Question 133

Holding everything else constant,the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes.

(Multiple Choice)

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Question 134

If Callum is consuming his utility maximizing bundle and the price of one good rises,what happens to the marginal utility per dollar spent on this good (MU/P),and what should Callum do?

(Multiple Choice)

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Question 135

Goods with upward sloping demand curves are referred to as

(Multiple Choice)

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Question 136

A significant downside to network externalities is that

(Multiple Choice)

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Question 137

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

(Multiple Choice)

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Question 138

If the price of steel increases drastically,the quantity of steel demanded by the building industry will fall significantly over the long run because

(Multiple Choice)

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Question 139

Consumers have to make tradeoffs in deciding what to consume because

(Multiple Choice)

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Question 140

Figure 7-5 -Refer to Figure 7-5.Using the midpoint formula,calculate the absolute value of the price elasticity of demand between e and f.

If a consumer always buys goods rationally,then

What is a Giffen good?

Many economists do not believe that network externalities lock consumers into the use of products that have technology inferior to other,similar products.These economists believe that

Suppose at a price of $50,Yoshi's Jazz Bar sells 20 tickets to its nightly jazz performance and at a price of $40,it sells 25 tickets.Based on this information,the demand for Yoshi's jazz performance is elastic.

The demand curve for an inferior good can never be downward-sloping.

Economists Gary Becker and Kevin Murphy are associated with which of the following?

Behavioral economics refers to the study of situations

A demand curve that is horizontal indicates that the commodity

A linear downward sloping demand curve has price elasticities (in absolute values)that

Holding everything else constant,the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes.

If Callum is consuming his utility maximizing bundle and the price of one good rises,what happens to the marginal utility per dollar spent on this good (MU/P),and what should Callum do?

Goods with upward sloping demand curves are referred to as

A significant downside to network externalities is that

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

If the price of steel increases drastically,the quantity of steel demanded by the building industry will fall significantly over the long run because

Consumers have to make tradeoffs in deciding what to consume because

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