hw 6 - 1eExercise‘ (J) Exercise Score: 1. of 1. pt...

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Unformatted text preview: 1eExercise‘ (J) Exercise Score: 1. of 1. pt Assignment Score: 53.3% (1.8.6? oF 20 pts] 20 of 20 complete E In deciding between conng more goods now or saving money, consumers should do which of the following? Allocate their spending to which of the two they like best. TWeigh the additional the}; get from consumption. V Choose an amount of current spending on goods and savings so that the marginal per dollar of both are equal. Choose an amount of current spending which gives them the highest total 1eExercise1‘ {JD Exercise Score: 1. oF 1. pt Assignment Score: 93.3% (1.8.6? oF 20 pts] ll) of 20 complete [Related to 39hng Problem 9.1] Joe has $16 to Spend on Engaging: marginal Twinkies and Ho-Hos. Twinldes have a price of $1 per HD-HDB 16 193%: pack and Ho-Hos have a price of $2 per pack. Use the 14 ' information in the following graphs to determine the number 12 of Twmkies packs and the number of Ho—Hos packs Joe “i should buy to maximize his 2 4 Joe should buy 4 Twinkies packs and o Ho—Hos packs. 12 Quantity of filo-Hos (number of packs] “x “x “x “x “x “x “x “x “x “x Q4 Q! g g g Q4 a Q! g J I leExerCIse‘l Exercise Score: 1. oF 1. pt Assignment Score: 93.3% (1.8.6? oF 20 pts] 20 :1le complete [Related to Soiree? Problem 9-1] Joe has $49 to spend on apples and oranges. Given the information in the following table, is Joe maximizing Total Marginal Utility Product Price Quantity L'tility ofLast L'nit Apples $0.50 50 lbs. 1,25fl 25 Oranges $0.60 40 lbs. 1.2% 3O V Yes. Joe is maximizing No. Joe is not maximizing d@@@@@@@@@@mb 1mm {J} Exercise Score: 1 0F 1. pt Assignment Score: 93.3% (13.6? of 20 pts) 20 of 20 complete E [Related to Dori 'rLei‘ This Happen To Ibuf] Mary is hu}ing corn chips and soda. She has 4 bags ofcorn chips and 5 hordes of soda in her shopping cart. The marginal ofthe fourth bag ofcorn chips is ll}; and the marginal ofthe sixth horde of soda is also 10. Is Mar}? maximizing Yes. She is maximizing V This cannot be determined because we do not know the price of corn chips and soda, and whether or not she fiJIlj; spent her budget allocated to corn chips and soda. No. She is maxfinizfi’rg marginal but not total No. She is not maximizing marginal leExarcis-a {J} Exercise Score: 1 of 1 pt Assignment Score: 93.3% (18.6? of 20 pts] 20 of 20 complete ‘ If pizza is an inferior good and its price falls which of the following will most likely occur? The income effect causes you to want to eat more pizza. '4' The substitution effect causes you to want to eat more pizza. The income and substitulion effect work in the same direction and cause you to want to eat less pizza. The income and substitution effect work in the same direction and cause you to want to eat more pizza. 19Exerci5931 Exercise Score: 1. of 1. pt Assignment Score: 53.3% (1.8.6? of 20 pts] 20 of 20 complete Whenever consumption takes place publicly. what does your decision to buy a product depend on? The decision depends strictly on how many other people are buying the product. The decision depends on factors other than the characteristics of the product or how many people are buying it. V‘ The decision depends bofll on the characteristics of the product and on how many odler people are buying the product. The decision depends strictly on the characteristics of the product. d@@@@@@@@@@bm hm Exercise Score: 1. of 1. pt Assignment Score: 93.3% EILELETI'I of 20 ptsj 20 :1le complet Linux is a computer operating system that is an alternative to Microsoft's Windows system. According to a newspaper article: "The dominance of the Windows operating system. which runs 95 percent of the world's PCs. is coming under grea attack in Asia than in any other part of the world, analysts say. Linux for PCs sold three times as many copies in A as in the US last year. _ _ _ "In emerging markets such as india and China where PC growth rates are the highest Linux's momentum seems to be accelerau'ng," said Robert Stimsom a Bank of America analyst in San Francisco" Source: "Gates Blitzes Asia to Stem Linux Threat," Zeniand Herald, June 29, llllld. If network externalities are important in choosing an operating system. why might Linux be more successful in Asia”? V Since fewer people have PCs in Asia. network externalities are less important than in the LLS. The cost of switching to Windows in Asia is high. Network externalities do not matter in the LLB. because most already own a PC. Since fewer people have PCs in Asia. network externalities are more important than in the 13.3. 'lEEZ-{EI'ClS-33 {J} Exercise Score: 1. of 1 pt Assignment Score: 53.3% (1.3.6? of 20 pts] 20 of 20 complete Refer to the figure to the right. When producers of a Broadway musical take fairness into account which of the following could be Hue? Egg SUPP'Y Producers could raise prices gradually as demand 5153 """"""""""""""""" " strengthens. Producers could charge $155 in anticipation of 133 stronger demand. The market will almost always settle in eqmlibrimn at 83 $125. V Producers could charge $85 even though the result Demand would be a shortage. 1:12” Number of tickets 19Exercise3 {JD Exercise Score: 1. OF 1 pt Assignment Score: 93.3% (18.6? of 20 pts] 20 of 20 complete Suppose that Spider—Man 3 comes out and hundreds of people arrive at the Cineplex only to discover that the movie is already sold out. Meanwhile, the Cineplex is also showing a boring movie in its third week of release in a mostly empty theater. Why would this firm charge the same $100 for a ticket to either movie, when the quantity of tickets demanded is much greater than the quantity supplied for one movie, and the quantity of tickets demanded is much less than the quantity supplied for the other? The firm may do this because the excess demanders from Spider—Man 3 may also decide to stay and watch their second-favorite movie. while planning to return to see Spider—Man 3 later. The firm may do this because a sell-out creates even more interest in the movie. bringing in more customers later in the week. The firm may do this because customers think this is fair. 9' All of the above. leEaercis-345 Exercise Score: 1 OF 1. pt Assignment Score: 93.3% (1.3.6? 0F 20 pts] 20 of 2|} complete After owning a used car for two years, you start having problems with it. You take it into the shop and are told that it will cost $4,000 to repair it. in considering whether to repair it or not you should take what into consideration? The price you paid for the car. Which alternative will give you the highest V "The comparison of the marginal benefit of spending $4,000 to have the car repaired against the benefits of spending the $4,000 in other ways. None of the above. leExertiSEJ? Exercise Score: 1. oF 1. pt Assignment Score: 83.3% (1.8.6? oF 28 pts) 20 {11:20 complete [Related to Soti'ed Problem 9-)] "If people were more realistic about their future behavior, the demand curve for potato chips would shift to the left." Is this probava true or false? V True False ‘\ x x 'x 'x ‘\ x x x 'x leExercisefi Exercise Score: 1. 0F 1 pt Assignment Score: 93.3% (1.8.6? 0F 28 pts] 20 of 20 complete A newspaper story on the effect ofhigher nt'lk prices on the market for ice cream contained the following. "As a result [ofthe increase in milk prices], retail prices for ice cream are up 4- percent from last year . . . . And ice cream consumption is down 3 percent." Source: John Curran, "Ice Cream, Ihey Scream: Hill: Fat Costs Drive Up Ice Cream Prices," Associated Press, July 23, 2991. a. The price elasticity of demand for ice cream is - .?5 . [Enter your response rounded to two dectmotptuces. Be sure to tnctude the mtnus sign: The revenue received bv the ice cream suppliers (due to these price changes) would have increased _ b. Suppose that price of ice cream increases bv 3% and the ice cream consumption decreases by 5%, given this information. the price elasticity of demand for ice cream is - 1.6? . [Enter your response rounded to two deotmdtptdces. Be sure to tnotude the mtnus stgn': The revenue received bf; ice cream suppliers (due to this price change) would have decreased 1eExercise5 Exercise Score: 8.6? oF 1. pt Assignment Score: 83.3% (18.6? oF 28 pts] 20:11:20 complete [Related to Solved Probtem 6-3] According to a stud}: bv the federal Centers for Disease Control and Prevention, the price elasticity of demand for cigarettes is - 0.25. Americans purchase about 481} billion cigarettes each year Source: "Response to Increases in Cigarette Prices by Racea'Ethnicity, Income, and Age Groups—United States, HTS—1993," .lforbfi'iiv and Humility “Wkly Report, J uLv 31, 1993. a. [f the federal tax on cigarettes were increased enough to raise the price of cigarettes b}: 4-0 percent, the quantitv of cigarettes demanded would decrease bf; 48 billion per year [enter your numerto response rounded to the nearest tnteger}. b. Ifthe demand for cigarettes is elastic ‘, then the price increase resulting from a tax increase will cause a larger decline in quantttv demanded in percentage terms. 1eExerciee5 I:x:l Exercise Score: 8 0F 1. pt Assignment Score: 83.3% (1.8.6? 0F 28 ptsj 20 0F 20 complete PRICE ELASTIEITY A study of the price elasticities of products sold in supermarkets w contained the data to the right. Soft Drinks —3. 18 Canned Soup —1.Eu2 Cheese —IIJ.?2 Toothpaste 43.45 Source: Stephen J. Hock, Ewing-do Kiln, Alan L. Montgomery, and Peter E. Rossi, "Determinants of Store—Level Price Elasticity," Journal, offlm‘iming Research, 1Vol.32, February 1995, pp.” - 29. a. The demand for canned soup is price elastic ‘ b. Using the data in the above table, a 30 percent increase in price, the quantity demanded for canned soup wifl decline by 48.5% {enter your respome rounded to one decimaipiace}. D teExercis Exercise Score: 1. of 1. pt Assignment Score: 93.3% (1.8.6? of 28 Fits] 20 of ED complete 1tilt-"him of the following is a true statement? The demand curve for a is less elastic than the demand curve for a necessity. The more time that passes, the more inelastic the demand for a product becomes. V The more narrowly defined a market is, the larger the price elasticity ofdemand. The fewer substitutes available for a product the greater the price elasticity of demand. 1eExerc I:J:I Exercise Score: 1. DF 1 pt Assignment Score: 83.3% (1.8.6? DF 28 FIG) 20 of 20 complet What is true about elasticity for a good that comprises a relatively small fiaction of the average consumer's budget? V The price elasticity of demand for that good is less than one in absolute value. Changes in the price of that good are insignificant. The price elasticity of demand for that good is greater than one in absolute value. The quantity of that good consumed is large relative to the quantity of other goods. leEx Exercise Score: 1. 0F 1. pt Assignment Score: 93.3% (1.8.6? 0F 20 pts] 20 of 20 comp The price elasticity for Herbal Essence shampoo is, in absolute value, which of the following? Neither larger nor smaller than the elaincity for any other type of shampoo. Smaller than the elasticity for all types of shampoos. V“ Larger than the elaincity for all shampoos. The same as the elasticity for all shampoos. dm@@@@@@@@@@t 1mm .3?) Exercise Score: 1 0F 1 pt Assignment Score: 93.39.. (13.5? 0F 20 pts] 2:: 01:20 complete What is true about demand elasticity for a good that comprises a relatively large fraction of the average consumer's budget The price elasticity ofdemand for that good is less than one in absolute value. The quanIi'ty of that good consumed is large relative to the quantity of other goods. Changes in the price ofthat good are msignificant. V The price elasticity of demand for that good is greater than one in absolute value. lEEXEFClSE I:J:I Exercise Score: 1. OF 1. pt Assignment Score: 93.3% (1.8.6? 0F 20 pts] 20 :1le complete [Related to Don 'rLet This Happen To Foul] The publisher ofa magazine gives his staff the information to the right. He tells them, Current orite 32.90 Der issue "Our costs are currently $150,900 more than our revenues each current sales 150300 mules Der month month. I propose to eliminate this problem by raising the price of current total “Sis 34509303 Der month the magazme to $3.00 per issue. This will result in our revenue being exactly equal to our cost." What must be true for the publisher's analysis to be correct? V Demand is perfectly inelastic. Demand is inelastic. Demand is elastic. Demand is perfectly elastic. 1eExercise? Exercise Score: 1 of 1 pt Assignment Score: 93.3% (18.6? of 20 Fits] 20 at: 20‘ complete V A. Price Q:- Price 0; Price 04' Price Q: U 5'] ............... .. 50 D 35 3: 30 30 25 25 20 0 500.000 0 500.000 0 500.000 0 500.000 Quantity Quantity Quantity Quantity The change in revenue as a result of the price change is $ 5,500,000 [Enter your response as an imgger._'i 1:. Assume that the price elasticity is - 3. Which ofthe following diagrams represents effect of raising the price from $2195 to $38.95. N! Price 04' Price Q: Price '0:- Price at ...
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hw 6 - 1eExercise‘ (J) Exercise Score: 1. of 1. pt...

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