Landrum, Week 4 Personal Assignment answered, Graded.docx

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NAME: BUSN 5620 Current Economics Analysis Week 4 Personal Assignment There is just one Internet Question in this assignment. Please remember to integrate graphs into your Word, Excel, or PDF document. If you have questions, please post them to the General Questions area of the Discussion forum. Problem 1 Why do people routinely stuff themselves at all-you-can-eat-buffets? Explain in terms of both utility and demand theories. The reason people pay more for buffets is because they think they get their money worth. But the owner know that they will never be able to eat more than they can at regular price. When we think of it at a economic standpoint its maximization of all that food at lower price. Price of goods/services is related to marginal utility the more food someone consume at a buffet the less likely they would want to pay additional for it. People go to buffets knowing they can eat 3 to 5 times without having to pay additional money. This is the law of demand where the more something is demanded at the buffet there isn’t an additional cost. Problem 2 According to Table 4.1, if price increases by 10 percent, how much will unit sales decline for a. coffee decline by 3% b. shoes 9% c. airline travel? 24% ( look on the scan copy work shown) All are correct Will total revenue increase or decrease for d. coffee, revenue increase Correct. e. shoes revenue stays same Incorrect. Coffee is inelastic. Thus, a price increase will lead to an increase in total revenue.
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