FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 7: Consumer Choice and Elasticity

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 191

True/False

Review LaterAdd Note

Review Later

When there are few substitutes available for a good,demand tends to be relatively inelastic.

Correct Answer

verified

Show Answer

Question 192

Multiple Choice

Review LaterAdd Note

Review Later

All of the following products are most likely to have significant network externalities except

A) cat food.
B) cell phones.
C) popular board games.
D) fax machines.

Correct Answer

verified

Show Answer

Question 193

Essay

Review LaterAdd Note

What is marginal utility and what is the law of diminishing marginal utility?

Which of the following would result in a higher absolute value of the price elasticity of demand for a product?

Figure 7-7 -Refer to Figure 7-7.The section of the demand curve labeled "A" represents

As a consumer consumes more and more of a product in a particular time period,eventually marginal utility

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

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

Table 7-6 $\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Beer (glasses) }\end{array} & \text { Total Utility } & \begin{array} { c } \text { Quantity of } \\\text { Pizza (slices) }\end{array} & \text { Total Utility } \\\hline 1 & 25 & 1 & 20 \\\hline 2 & 45 & 2 & 35 \\\hline 3 & 60 & 3 & 45 \\\hline 4 & 65 & 4 & 50 \\\hline 5 & 69 & 5 & 52 \\\hline 6 & 70 & 6 & 52 \\\hline\end{array}$ Table 7-6 shows Antonio's utility from beer and pizza. -Refer to Table 7-6.What is Antonio's marginal utility from consuming the fifth beer?

Figure 7-6 -Refer to Figure 7-6.Which of the following statements is true about the price elasticity of demand?

For each pair of items below determine which product would have the higher price elasticity of demand (in absolute value). a.Insulin for a diabetic or aspirin for someone suffering a headache. b.A new Whirlpool 27 cu.ft.side-by-side refrigerator or electricity to power your all-electric home. c.A can of Red Bull or soft drinks in general.

The estimated price elasticities of demand for the products listed in the table as "Product A" are from Table 7-5 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. $\begin{array}{|l|l|l|l|}\hline &\text { Estimated } && \text { Is Estimated Elasticity for } \\\hline &\text { Elasticity for } & &\text { ProductB More Elastic or Less } \\ \text { Product A } & \text { Product A } & \text { Product B }&\text { Elastic than for Product A? }\\\hline \text { Beer } & -0.29 & \begin{array}{l}\text { Samuel Adams } \\\text { Boston Lager }\end{array} \\\hline \text { Chicken } & -0.37 & \begin{array}{l}\text { Organically } \\\text { raised chicken }\end{array} \\\hline \text { Cocaine } & -0.28 & \text { Illegal narcotics } \\\hline \text { Cigarettes } & -0.25 & \text { Marlboro Lights } \\\text { Restaurant } & & \begin{array}{l}\text { Denny's Grand } \\\text { Slam breakfast }\end{array} \\\hline\end{array}$

The endowment effect is the tendency of people to be unwilling to sell a good they already own even if they are offered a price greater than they would be willing to pay to buy the good if they did not already own it.

The average price of gasoline in your neighborhood is $3.53 per gallon.Your neighbor,Diana tells you that you can "save a lot" by frequenting a gas station 20 miles outside your neighborhood where the price of gasoline is $3.46 per gallon However,she cautions you that there usually long lines at that station.Is her suggestion beneficial to you?

Which of the following products comes closest to having a perfectly inelastic demand?

If Marlowe obtains 9 units of utility per dollar spent on apples and 6 units of utility per dollar spent on oranges,then Marlowe

The demand curve for a Giffen good is

For a demand curve to be upward sloping,the good would have to be an inferior good,and

Molly received an autographed poster of David Hasselhoff for her 21st birthday.Her friend Helga offered her $50 for the poster,but Molly refused to sell the poster even though she knows she would never pay that much to replace it if it was ever damaged or destroyed.Explain this inconsistency in Molly's behavior.

Consumers maximize total utility within their budget constraint by