Exam 7: Consumer Choice and Elasticity

Holding everything else constant,the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes in general.

Suppose at a price of $50,Yoshi's Jazz Bar sells 20 tickets to its nightly jazz performance and at a price of $40,it sells 25 tickets.Based on this information,the demand for Yoshi's jazz performance is elastic.

Suppose the absolute value of the price elasticity of demand for basketball game tickets on your campus is greater than 1.Increasing ticket prices will increase the total revenue from ticket sales.

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.If Keegan can drink all the bubble tea he wants for free,how many glasses will he consume?

Figure 7-4 -Refer to Figure 7-4.A perfectly inelastic demand curve is shown in

Which of the following is a common mistake made by consumers?

A common mistake made by consumers is the failure to take into account the monetary costs of their actions.

A study of the effects of the minimum wage on employment of low-skilled workers estimated the price elasticity of demand for low-skilled workers is -0.75.Suppose that the government is considering raising the minimum wage from $7.25 per hour to $7.75 per hour.Based on this information,calculate the percentage change in the employment of low skilled workers.Use the midpoint formula.

If the demand for iPods is price elastic,then

Price elasticity of demand measures

Why do many film processing companies have a policy of printing every picture on a roll of film or a memory card,even if the picture is very fuzzy and customers are allowed to ask for refunds on any pictures they do not like?

What is behavioral economics?

Avner is maximizing total utility by buying sports magazines and protein supplements.For him to buy more sports magazines

If the price elasticity of demand for canned soup is estimated at -1.62.What happens to sales revenue if the price of canned soup rises?

Figure 7-2 Figure 7-2 represents the demand for ice cream cones. -Refer to Figure 7-2.When the price of ice cream cones increases from $2 to $3,quantity demanded decreases from 4 ice cream cones to 3 ice cream cones.This change in quantity demanded is due to

There are two conditions necessary for a consumer to maximize her utility.One is that the marginal utilities per dollar spent on each good and service consumed are equal.What is the other condition?

If at a price of $24,Octavia sells 36 home-grown orchids and at $30 she sells 24 home-grown orchids,the demand for her orchids is

You are the manager of a theater.At present the theater charges the same admission price of $8 to all customers,regardless of age.You propose a two-tier pricing scheme: $5 for children under the age of 12 and $10 for adults.You tell your supervisor that your proposal is likely to increase revenue.What must be true about the price elasticity of demand if your proposal is to achieve its goal of raising revenue? Explain your answer.

According to an article in the Wall Street Journal,unlike airlines,even elite hotels don't have sophisticated systems that can react quickly to changes in demand.Even if they could,many hoteliers say people don't respond that much to lower rates."We've tested this,cutting our rates by $50 [per night],and we didn't see an appreciable response in occupancy," says Jim Schultenover,a vice president for Ritz-Carlton. Source: Jesse Drucker,"In Times of Belt-Tightening,We Seek Reasonable Rates," Wall Street Journal,April 6,2001. Based on the information above,the demand for hotel rooms is

Carrie Bradshaw claims that when it comes to buying shoes,"price is no object." If this is true,then her demand for shoes is