Exam 7: Consumer Choice and Elasticity

Harvey Miller owns a baseball that was hit for a home run by Ted Williams.Harvey,a long-time Boston Red Sox fan,recently refused to sell his baseball for $75,000 even though he would not have paid someone more than $10,000 for the baseball if he did not already own it.Harvey explained his decision not to sell the baseball by noting that: "Ted Williams was my hero.This baseball has a great deal of sentimental value for me." Which of the following can explain Harvey's behavior?

Describe the demand curve for a Giffen good.

Suppose Adam Einberg pays $100 for a ticket to a new Broadway play and $100 was the maximum price he was willing to pay.On the day of the performance of the play Adam refuses to sell the ticket for $150.How would behavioral economists explain Adam's refusal to sell his ticket?

In 2016,the face value of tickets to the Broadway musical Hamilton was

The order of the letters along the rows of computer keyboards could be changed to allow users to type faster,but this would inconvenience the vast majority of people who learned to type with the current keyboard layout.The costs of switching to a new layout make this change unlikely.This is an example of

The amount of income a consumer has to spend on goods and services is known as

Figure 7-3 Bettye Babylon does not charge admission to her arboreal estate, the Hanging Gardens. Due to space limitations, Bettye only allows 200 visitors per day at her estate. The figure represents the supply and demand for admission to the Hanging Gardens. -Refer to Figure 7-3.At a price of ________,there is neither a shortage nor surplus of tickets.

Explain the concept of network externalities.

Jonah lives in a small town where there is only one Mexican restaurant.Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant?

Figure 7-3 Bettye Babylon does not charge admission to her arboreal estate, the Hanging Gardens. Due to space limitations, Bettye only allows 200 visitors per day at her estate. The figure represents the supply and demand for admission to the Hanging Gardens. -Refer to Figure 7-3.At a ticket price of $0,the marginal benefit from the 200th ticket is

Economists have noted that businesses of a certain type tend to congregate geographically,attracting workers with skills in those fields.This,in turn,lures more firms seeking employees with those skills.Some examples include commercial banking,software development,and the automobile industry.What mechanism is at work here? Briefly explain how the mechanism works to the advantage of employers and employees.

A standard which came to the market first,such as the QWERTY letter layout in typewriters,can become entrenched (this layout is still used for computer keyboards today).What is this phenomenon called?

The economic model of consumer behavior explains how consumers' tastes and preferences are formed.

If the absolute value of the price elasticity of demand for gasoline is 0.5,then a 10 percent increase in the price of gasoline leads to a 0.5 percent decrease in the quantity demanded.

Suppose a decrease in the supply of paper results in an increase in revenue.This indicates that

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?

The word "util" has been used by economists in the past as an objective measure of utility.Today economists believe that

Table 7-10 The publisher of a magazine gives his staff the following information: Current price \ 2.00 per issue Current sales 150,000 copies per month Current revenue \ 300,000 per month Current total costs \ 450,000 per month He tells the staff, "Our costs are currently $150,000 more than our revenues each month. I propose to eliminate this problem by raising the price of the magazine to $3.00 per issue. This will result in our revenue being exactly equal to our cost." -Refer to Table 7-10.Which of the following statements is correct?

If Valerie purchases ankle socks at $5 and gets 25 units of marginal utility from the last unit,and bandanas at $3 and gets 12 units of marginal utility from the last bandana purchased,she

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?