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 an example of

If a firm raised its price and discovered that its total revenue fell,then the demand for its product is

If a firm lowered the price of the product it sells and found that total revenue did not change,then the demand for its product is

To calculate the price elasticity of demand,we divide

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.What is Keegan's optimal consumption bundle?

Why might network externalities result in products that contain inferior technologies?

The additional utility that George receives from consuming one more slice of pizza is called

All but one of the following have been suggested by some economists as possible consequences of path dependency and switching costs.Which of the following is not a possible consequence of path dependency and switching costs?

Ali's Gyros operates near a college campus.Ali has been selling 120 gyros a day at $4.50 each and is considering a price cut.He estimates that he would be able to sell 200 gyros per day at $3.50 each. a.Calculate the price elasticity of demand using the midpoint formula. b.Calculate the change in revenue as a result of the price cut.

Figure 7-6 -Refer to Figure 7-6.Using the midpoint formula,calculate the absolute value of the price elasticity of demand between e and f.

For each pair of items below determine which product would have the higher price elasticity of demand (in absolute value). A)Blood pressure medicine for someone who has high blood pressure or the purchase of Clairol hair coloring product. B)A new Ford Fusion or a tank of gas for your current car. C)A Seiko watch or watches in general.

If a firm's goal is to maximize revenue,it will price its product to correspond to the unit-elastic segment of its demand curve.

The economic model of consumer behavior predicts that

Consider the following types of demand curves: A.a vertical demand curve B.a horizontal demand curve C.a linear downward-sloping demand curve Which of the demand curves listed exhibits a price elasticity of demand coefficient that remains constant along the demand curve?

Figure 7-1 -Refer to Figure 7-1.When the price of hoagies increases from $5.00 to $5.75,quantity demanded decreases from Q₁ to Q₀.This change in quantity demanded is due to

What is the endowment effect?

Marginal utility is

One reason that consumers and businesses might not act rationally is

The demand for all carbonated beverages as a whole is likely to be ________ the demand for Dr.Pepper.

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