Exam 7: Consumer Choice and Elasticity

The price elasticity of demand for beef is estimated to be 0.60 (in absolute value).This means that a 20 percent increase in the price of beef,holding every thing else constant,will cause the quantity of beef demanded to

Figure 7-1 -Refer to Figure 7-1.Which of the following statements is true?

When is demand perfectly elastic? When is demand perfectly inelastic? What are the values of the price elasticity of demand when demand is perfectly elastic or perfectly inelastic? What do perfectly elastic and perfectly inelastic demand curves look like?

Figure 7-10 -Refer to Figure 7-10.Using the total revenue test to verify the price elasticity between points a and b on the demand curve,demand is

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

A network externality occurs when

List the five key determinants of price elasticity of demand and explain how each determinant indicates if demand tends to be elastic or inelastic.

The current price of canvas messenger bags is $36 each and sales of the bags equal 400 per week.If the price elasticity of demand is -2.5 and the price changes to $44,how many messenger bags will be sold per week? Use the midpoint formula.

An economist observes two consumers in a supermarket.One of the consumers buys a case of Coca-Cola and the other buys a case of Pepsi-Cola.Both colas sell for the same price and the ages and incomes of the consumers are also the same.Based on this information,how would the economist explain the consumers' choices?

A study discussed in the Making the Connection feature in the text found that there is ________ that some consumers are not well aware of prices,even for goods they buy regularly.

Which of the following statements is true?

The demand for gasoline in the short run is

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

If a 35 percent increase in price of golf balls led to an 42 percent decrease in quantity demanded,then the demand for golf balls is

If the marginal utility Ida Mae receives from eating chicken wings is negative then

Behavioral economists examine choices that consumers make that are not economically rational.Economists generally assume that people are rational; that is,they weigh the benefits and costs of an action and choose an action only if the benefits outweigh the costs.Why do consumers not act rationally when the result is that they make themselves worse off?

If Paul decides to buy a $60 ticket to a Cirque du Soleil show rather than a $45 ticket for a Blue Man Group performance,we can conclude that

Economists use the concept of ________ to measure how one economic variable,such as quantity,responds to a change in another economic variable,such as price.

The estimated price elasticities of demand for the products listed in the table as "Product A" are from Table 7-7 in the text.Indicate whether the products listed as "Product B" will have a more elastic or less elastic demand than the corresponding Product A. Product A Estimated Elasticity for Product A Product B Is Estimated Elasticity for Product B More Elastic or Less Elastic than for Product A? Beer -0.29 Samuel Adams Boston Lager Chicken -0.37 Prganically raised chicken Cocaine -0.28 Fllegal narcotics Cigarettes -0.25 Marlboro Lights Restaurant Penny's Grand meals -0.67 Slam breakfast

What did economists Robert Jensen and Nolan Miller determine must be true for a good to be a Giffen good,where the income effect is larger than its substitution effect?