Exam 7: Consumer Choice and Elasticity

Which of the following is a common mistake consumers commit when they make decisions?

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,then an increase in tolls will result in

If the market for a product is broadly defined,then

Before digital photography,most film processing companies had a policy of printing every picture on a roll of film and allowing customers to request a refund for pictures that were not clearly developed.The companies did this knowing that most customers did not ask for refunds.This was an example of consumers

The quantity of tickets demanded to the Super Bowl is always greater than the quantity supplied.Which of the following in the best explanation why the National Football League does not raise the price of tickets to the level where the quantity demanded equals the quantity supplied?

If Joey Kobayashi experiences diminishing marginal utility from eating hot dogs then

Economists Robert Jensen and Nolan Miller reasoned that to be a Giffen good,with an income effect larger than its substitution effect,a good must be ________ and make up a ________ portion of a consumer's budget.

Total revenue equals

Suppose Renee can increase her total utility from consuming video rentals and books by buying one more book and renting one fewer video.Which of the following is true?

Figure 7-9 -Refer to Figure 7-9.As price falls from PA to PB,the quantity demanded increases the most along D₁; therefore

If,when price changes by 35 percent,the quantity demanded changes by 7 percent,then the absolute value of the price elasticity of demand is 5.

The iPod is a product without any significant network externalities.

Suppose Barry is maximizing his utility from consuming used paperback novels and audio books.The price of a used novel = $4 and the price of an audio book = $8.If the marginal utility of the last novel was 32 units of utility (utils)what was the marginal utility of the last audio book purchased?

When the price of tortilla chips rose by 10 percent,the quantity of tortilla chips sold fell 4 percent.This indicates that the demand for tortilla chips is

Music writer Anthony Kuzminski praised the late rock star Tom Petty in a 2007 article in the online Unrated Magazine.Kuzminski wrote: "Something Petty never can get enough credit for is his fan-friendly attitude.He kept ticket prices for [his concerts] at $50 when other acts this summer are charging upwards of $100 for stadium gigs.Petty could charge more,but he doesn't see the point.He has stated time and time again he still makes millions when he's on the road,regardless of his ticket prices.He is the last of the fan friendly rock stars out there." Use economic reasoning to write a rationale for Tom Petty's decision to charge prices for his band's ("Tom Petty and the Heartbreakers")concerts that were less than market clearing prices. Source: Anthony Kuzminski,"Tom Petty & The Heartbreakers at the Vic Theater"

Suppose your marginal utility from consuming the 3rd slice of cake is zero,then your total utility from consuming cake is

Jamal,Lawson,and Kyle have been standing in line for almost an hour waiting to be served at Kirala,a popular new Japanese restaurant.It is possible that some of the people in line won't be served at all before the restaurant closes.Which of the following could explain why the restaurant does not simply raise prices high enough to eliminate the lines? A.In situations where consumption takes place publicly,demand for the product is also influenced by how many other people are buying the product.Consequently,a popular restaurant that increased its prices enough to eliminate lines might find that it had also eliminated its popularity. B.Firms may sometimes not raise their prices for fear that it violates people's sense of fairness and might alienate customers. C.The demand for restaurant meals is relatively elastic and if the firm raises prices it will lower its profits.

An advantage of Microsoft Windows is its compatibility with the widest range of hardware and software.The dominance of Windows is self-reinforcing: hardware and software manufacturers ensure that their products are compatible with Windows in order to have access to the large number of Windows users.Which situation best describes this scenario?

Some economists have suggested that network externalities result in consumers being locked into the use of products with inferior technologies.Economists Stan Leibowitz and Stephen Margolis have studied cases that have been cited as examples of this and found

When Audrina raised the price of her homemade cookies,her total revenue increased.This suggests that the demand for Audrina's cookies is elastic.