elasticity questions 1 If a television commercial which asserts - PDF document

Utility winter 13.notebook March 21, 2013 Volunteer A Volunteer C Volunteer B Total Utility Marginal Utility Mar 10­8:58 AM Oct 18­8:09 AM Damien has 14 hours per week to spend at the movies or the gym. Each movie visit and workout takes 2 hours. How should he allocate his time? Marginal Marginal Utility from Gym Visits Movies per Utility from Utility from Utility from per Week Gym Visits week Movies Gym Visits Movies 1 100 1 60 2 180 2 110 3 240 3 150 4 280 4 180 5 310 5 190 6 330 6 195 7 340 7 197 Mar 10­9:00 AM Oct 19­8:33 AM elasticity questions 1 If a television commercial which asserts that “the last bite tastes just as good as the first,” is correct, then the marginal utility of the advertised product must be: Grade: «grade» A Increasing Subject: B Constant Date: «date» C Decreasing D Zero Mar 21­8:02 AM Oct 19­8:21 AM 1

Utility winter 13.notebook March 21, 2013 2 Your marginal utility of hamburgers is: 3 As Shana’s consumption of tacos increases, her: is always greater than your total utility from A marginal utility from tacos increases A hamburgers B marginal utility from tacos decreases is always greater than your average utility from B C total utility from tacos decreases hamburgers D both total and marginal utility from tacos decrease C is always greater than the price of hamburgers depends on how many hamburgers you’ve already D eaten Oct 19­8:22 AM Oct 19­8:23 AM 4 Total utility will fall whenever: 5 The more Mabel exercises, the more she enjoys each visit to the gym. This is an example of: A marginal utility is falling. A Diminishing marginal utility B marginal utility is rising. B Constant marginal utility C marginal utility has reached a maximum. C Increasing marginal utility D marginal utility is zero. E marginal utility is negative. Oct 19­8:24 AM Oct 19­8:28 AM 6 Although Mei's classical DC collection is huge, her 7 When Dexter was a struggling student, his enjoyment enjoyment from buying another CD has not changed as from a good restaurant meal was greater than now, when he has them more frequently. This is an her collection has grown. This is an example of: example of: A Diminishing marginal utility A Diminishing marginal utility B Constant marginal utility B Constant marginal utility C Increasing marginal utility C Increasing marginal utility Oct 19­8:29 AM Oct 19­8:33 AM 2

Utility winter 13.notebook March 21, 2013 8 The price elasticity of demand of a good is 1.25. 9 The demand for a particular brand of toothpaste: Which of the following statements is correct? is more elastic than the demand for toothpaste, A because toothpaste is a necessity. A the demand for the good is elastic. is less elastic than the demand for toothpaste, B B the demand for the good is inelastic. because toothpaste is a necessity. C the good is a necessity is more elastic than the demand for toothpaste, C because a particular brand always has close D the good is a luxury substitutes D none of the above. Mar 21­8:02 AM Mar 21­8:02 AM 10 The demand for a product is likely to be more elastic 11 A newspaper publisher decides to cut price in under which two of the following circumstances? order to raise circulation and revenue. This policy is more likely to be successful when demand for the newspaper is which one of the following? A The time period involved is short. B Few close substitutes in consumption C The time period involved is long A Unit elastic. D Many close substitutes in consumption. B Perfectly inelastic. C Relatively inelastic. D Relatively elastic. Mar 21­10:02 AM Mar 21­8:02 AM 12 Which of the following is likely to have the most 13 The greater the elasticity of supply: elastic demand? the more an increase in demand will increase A A Food price B Fruit the more an increase in demand will increase B quantity C Bananas C the steeper the supply curve, all else equal D Dole brand bananas the more likely the product has no close D substitutes Mar 21­8:03 AM Mar 21­8:03 AM 3

Utility winter 13.notebook March 21, 2013 Oct 19­8:33 AM 4

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