Exam 7: Consumer Choice and Elasticity

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

According to a study of the price elasticities of products sold in supermarkets,the price elasticity of demand for toothpaste is estimated at -0.45.Which of the following could explain why the price elasticity of demand for toothpaste is so low?

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

Suppose that when the price per ream of recycled printer paper rises from $4 to $4.50,the quantity demanded falls from 800 to 600 reams per day.Using the midpoint formula,what is the price elasticity of demand (in absolute value)over this range?

For which of the following products is social influence likely to have the greatest impact?

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

If the price elasticity of demand is unit elastic,a 10 percent increase in price will result in a 10 percent increase in revenue.

In the ultimatum game,allocators usually offer recipients at least a 40 percent share of the money,and recipients almost always reject offers of less than a 10 percent share.Which of the following does not explain why allocators offer recipients a relatively generous share and why recipients reject meager offers?

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.

Most people would prefer to drive a luxury car that has all the options,but more people buy less expensive cars even though they could afford the luxury car because

To maximize utility consumers should buy goods and services to the point where the marginal utility of each item consumed is maximized.

Figure 7-5 -Refer to Figure 7-5.The absolute value of the price elasticity of demand at points a and b is 1.What is the value of Pb?

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? Assume your budget is large enough to purchase either item.

Suppose a decrease in the supply of bottled water results in a decrease in revenue.This indicates that

Grace Makutsi finally bought a pair of blue shoes that she had been coveting for a long time.In less than a week she discovered that the shoes were uncomfortable.Grace went back to wearing her old pair and stashed away the new pair.When asked by her boss,Mme.Ramotswe,why does she not simply give away the new pair,she said: "But I paid so much for them." Grace's behavior

If,for a given percentage increase in price,quantity demanded falls by a proportionately smaller percentage,then demand is

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

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

Perfectly inelastic demand is represented by a demand curve which is ________,and relatively inelastic demand is represented by a demand curve which is ________.

Assume that the demand curve for sunblock is linear and downward sloping.Which of the following statements about the slope of the demand curve for sunblock and the price elasticity of demand for sunblock are true?