Consumer choice and elasticity

Consumer choice and elasticity are important concepts in economics that help to explain how consumers make decisions about purchasing goods and services, and how those decisions are affected by changes in price and other factors.

Elasticity is a measure of how responsive the quantity demanded of a good or service is to changes in its price. A good or service that is considered to be elastic will see a large change in the quantity demanded when its price changes, while a good or service that is considered to be inelastic will see a smaller change in the quantity demanded when its price changes.

Consumer choice is the process by which consumers decide what to buy, based on factors such as price, quality, and availability. Factors such as income, preferences, and consumer tastes also play a role in consumer choice.

In general, consumer choice is influenced by the relative prices of different goods and services, as well as by the consumer’s own income and tastes. When the price of a good or service increases, consumers are likely to reduce their consumption of that good or service and shift their spending to other goods or services that are considered to be better value for money.

Elasticity is an important concept for businesses and policymakers to understand, as it can help them to predict how changes in price and other factors will affect consumer behavior. For example, if a business raises the price of a good or service that is considered to be elastic, it may see a significant decline in the quantity demanded, which could result in a decrease in revenue. On the other hand, if a business raises the price of a good or service that is considered to be inelastic, it may see a smaller change in the quantity demanded, which could result in an increase in revenue.

In conclusion, consumer choice and elasticity are closely related concepts in economics that help to explain how consumers make decisions about purchasing goods and services, and how those decisions are affected by changes in price and other factors. Understanding these concepts can be important for businesses and policymakers looking to make decisions about pricing, marketing, and other aspects of their operations.

1.Goods that have a negative income elasticity are known as:
2.Which of the following fundamental principles does not underlie the choices of consumers?
3.If the absolute value of the price elasticity of eggs is 1.5, a 10 percent reduction in the price of eggs would lead to a:
4.Anne usually eats out at restaurants 20 times a month. Due to higher food prices, the cost of restaurant meals rises substantially. If, as a result, Anne not only eats out less but also purchase less of other goods, such as clothing, due to the decreased real purchasing power of her monthly budget this illustrates:
5.Suppose a 20 percent increase in Henry’s income results in a 10 percent increase in the quantity of cigars he consumes. Henry’s income elasticity of demand for cigars is:
6.When the demand for a good is price elastic, a decrease in the price of the good will result in:
7.Suppose at his current rates of consumption, Max has a marginal utility of 5 for the last apple consumed and 12 for the last hamburger consumed. If the price of apples is $1 and the price of hamburgers is $3, to maximize his utility Max should:
8.A bakery sells 50 slices of cakes per week when the price of each slice is $2. The shop owner lowers the price to $1, and as a result sales increase to 60 slices per week. The price elasticity of demand for cake slices is:
9.A local clothing store is having a sale in which if you purchase one men’s suit at full price, you can then purchase a second suit at half price. Russell purchases only one suit at the sale. The best explanation for why he would not purchase a second suit, even though the price is lower, is:
10.Suppose Jacob’s income elasticity of demand for gasoline is 0.75. If Jacob’s income rises by 20 percent, then the percentage change in his quantity demanded of gasoline will be:
11.A luxury good is one that has:
12.The price elasticity of demand for a product is:
13.Which of the following is true of the substitution effect of a price change?
14.Suppose an apple and an orange yield the same amount of benefit for Erin, and she is getting ready to purchase one of them for a snack. Which of the following is true according to the principles of consumer choice?
15.The price elasticity of supply of a product is:
16.The relationship between elasticity and the length of the adjustment period is sometimes referred to as the second law of demand, in the case of price increase it states that:
17.When the absolute value of the price elasticity of demand for a good is equal to one, an increase in the price of the good will:
18.Identify the correct statement about the income effect of a price change.
19.Suppose a good has many substitutes available in the market. Which of the following is likely to be true?
20.The law of diminishing marginal utility implies that the height of the demand curve for a good:
21.If the absolute value of the price elasticity of demand for a good is 1.5, the demand for the good is considered:
22.The income elasticity of demand for a good is the:
23.If Kelly purchases fewer hot dogs as her income rises, then:
24.If the demand for a good is «perfectly elastic», then the demand curve for the good will be:
25.Suppose the price of a pack of cigarettes increases from $5 per pack to $8 per pack and causes the quantity demanded to reduce from 200 packs to 190 packs per month. The absolute price elasticity of demand for cigarettes is approximately:
26.If even a large percentage change in the price of heart surgeries to only a small percentage change in quantity demanded, we can conclude that:
27.A necessity good is one that has:
28.The law of demand states that:
29.Suppose the price of smartphones increases by 5 percent and the quantity demanded of smartphones falls by 10 percent. The coefficient of price elasticity of demand for smartphones is:
30.For any two goods, utility is maximized when:
31.Suppose at a price of $500 per laptop, the quantity demanded of laptops is 180 units. When the price of laptops increases to $600, the quantity demanded by consumers falls to 120 units. The absolute value of the price elasticity of demand for laptops is:
32.In the (arc) price elasticity formula, the percentage change in the price of a good (or quantity) is calculated differently than a normal percentage change. For the purposes of elasticity the percent change in price is computed by:
33.Suppose Chloe consumes 2 burgers per week at a price of $5 per burger and James consumes 5 burgers per week at the same price. The total quantity of burgers demanded in this two-person market at the price of $5 is:
34.Just like the price elasticity of demand, the price elasticity of supply:
35.A normal good is a good that has a:
36.When the demand for a good is inelastic, an increase in the price of the good will result in:
37.Keesha buys a pound of beef every week at the store. However, an increase in the price of beef causes Keesha to purchase a pound of chicken instead. Which of the following statement is true?
38.Suppose Brady is grocery shopping and the store is out of beef, so Brady buys chicken instead. Brady’s choice reflects the fact that:
39.Which of the following is true of marginal utility?
40.Suppose the price elasticity of demand for eggs is 3 and the price elasticity of demand for toilet paper is 0.35. This implies that:
41.Suppose there is an increase in the price of automobiles, but total consumer expenditures (and total sales revenue) remain the same. The price elasticity of demand, in absolute value, must be equal to:
42.Suppose Nancy is currently maximizing her utility by purchasing 2 hats and 5 t-shirts. The prices of hats and t-shirts are $15 and $12, respectively. If Nancy derives a marginal utility of 30 from the last hat purchased, the marginal utility derived from the last t-shirt purchased is:
43.The maximum price a consumer is willing to pay for an additional unit of a good shows the:
44.Reagan spends more time doing research regarding which car she is going to purchase than she does regarding which coffee maker to purchase. This illustrates the consumer choice principle that:

Показать комментарииЗакрыть комментарии

Оставить комментарий