View the step-by-step solution to:

Which good/service can be considered being closest to having a price elasticity of demand that is perfectly price inelastic:

6.

Which good/service can be considered being closest to having a price elasticity of demand that is perfectly price inelastic:

a cavity filling service performed by a dentist

b car wash service

c HIV medication

d Opiod Prescriptions (Highly addictive pain relieving medications)

7.

A date with Google George costs you \$100 and gives you an additional 1000 units of utility. A date with Harley Harry costs you \$200 and an additional 4,000 units of utility. Based only on the information you have, using the theory of rational choice, you most likely would:

b date Google George because the marginal utility per dollar is the greater of the two

c date Harley Harry

d be indifferent between the two dates

9

A Whopper combo meal costs \$3.00 and gives you an additional 15 units of utility; a meal at the Embassy Suites costs \$29.00 and gives you an additional 145 units of utility. Based solely on the information you have, using the theory of rational choice, you most likely would:

a choose to eat the Whopper combo meal

b be indifferent between the two meals

c choose to eat at the Embassy Suites

d decide that eating at the Embassy Suites is preferable because though the marginal utilities of both meals are the same, the total utility is greater in the case of the meal at the Embassy Suites.

20

Suppose that the price is increased by the government from a market equilibrium value of \$10 to a higher value of \$12:

a there will be lost surplus, as both producer surplus and consumer surplus decrease.

b consumer surplus will decrease and there will be some lost surplus.

c producer surplus will decrease and there will be some lost surplus.

d both producer surplus and consumer surplus will increase.

22 Suppose that Mexico was deciding between taxing either beer or soda to reduce the consumption of those goods, but they only have resources to tax one good. Suppose that Mexico decided to tax soda. If Mexico's goal is to get the largest health gains or reductions in consumption possible from a single tax, then we can assume with a high probability that the Mexican Government is assuming that soda consumption's:

a price elasticity of demand is perfectly elastic when compared to beer

b price elasticity of demand is inelastic and is more inelastic than beer

c price elasticity of demand is elastic and is more elastic than beer

d price elasticity of supply is perfectly inelastic relative to beer

32.

The short-run elasticity of demand for bottled water sold at convenience stores is 0.20. If a hurricane causes the supply of bottled water to fall, resulting in a 5 percent drop in quantity, if other things remain constant, the price of a bottle of water will increase by:

a 4 percent

b 20 percent

c 25 percent

d 5 percent

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
• -

Study Documents

Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

Browse Documents