Economics (Book Only)
12th Edition
ISBN: 9781285738321
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 4.3, Problem 2ST
To determine
The validity of the given statement.
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Students have asked these similar questions
In the following scenarios, you will be given a product and an event. Determine what will happen to the demand for the product based on the event, what happens to the demand curve, and give the non-price determinant that caused it to occur. (chose from the 7 determinants listed in the notes). The first one is answered for you as an example.
EXAMPLE/ Product - Hamburgers Event - The price of steak increases Answer/ Demand increases - Curve shifts right - Price of substitutes
1. Pepsi - The price of Coke decreases dramatically.
2. Steak - Incomes fall due to the recession
3. Hair dye - Hair dye is successfully advertised in the media.
4. Computer software - The price of computers goes down.
How does the selling price of a house depend on such factors as the square footage of the house, the number of bedrooms in the house, and perhaps others?
If a good is free, when will a consumer stop wanting to buy the good?
Once the total utility equals zero
At the quantity where marginal utility is at its maximum
Once the marginal utility equals zero
When marginal utility is negative
Once the marginal utility equals total utility
What is used to measure a consumer's entire satisfaction or happiness of a
choice?
Total utility
Marginal cost
Marginal utility
Total Revenue
Total costs
Which of the following best defines the term utility as it is used by economists?
when a market allocates resources in a way that maximizes consumer and producer
surplus
Chapter 4 Solutions
Economics (Book Only)
Ch. 4.1 - Prob. 1STCh. 4.1 - Prob. 2STCh. 4.1 - Prob. 3STCh. 4.2 - Prob. 1STCh. 4.2 - Prob. 2STCh. 4.2 - Prob. 3STCh. 4.3 - Prob. 1STCh. 4.3 - Prob. 2STCh. 4 - Prob. 1VQPCh. 4 - Prob. 2VQP
Ch. 4 - Prob. 3VQPCh. 4 - Prob. 4VQPCh. 4 - Prob. 5VQPCh. 4 - Prob. 1QPCh. 4 - Prob. 2QPCh. 4 - Prob. 3QPCh. 4 - Prob. 4QPCh. 4 - Prob. 5QPCh. 4 - Prob. 6QPCh. 4 - Prob. 7QPCh. 4 - Prob. 8QPCh. 4 - Prob. 9QPCh. 4 - Prob. 10QPCh. 4 - Prob. 11QPCh. 4 - Prob. 1WNGCh. 4 - Prob. 2WNGCh. 4 - Prob. 3WNGCh. 4 - Prob. 4WNGCh. 4 - Prob. 5WNGCh. 4 - Prob. 6WNG
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- Suppose goods A and B are substitutes. If the price of good A increases, will the demand for good B increase or decrease?arrow_forwardHow does the equilibrium price of a normal commodity change when income of its buyers falls? Explain the chain effects.arrow_forward“Owen saw that the price of peaches had gone down, and so he decided to buy more peaches.” Based on this information, what does Owen's reaction reflect? Explain.arrow_forward
- True/False? Briefly explain. Assume good x is a normal good. In terms of consumer behavior, a cash grant and a small (relative to the initial consumption of x) limited non-matching grant on good x (with the limit that is equal to the cash grant) are essentially equivalent.arrow_forwardCasper's utility function is 3x + y, where x is his consumption of cocoa and y is his consumption of cheese. If the total cost of x units of cocoa is x2, the price of cheese is $8, and Casper's income is $174, how many units of cocoa will he consume?arrow_forwardHow can the owner of The Burger Barn determine if a one-day promotional sale on milkshakes will affect the total revenues generated by hamburger sales ?arrow_forward
- From economic theory, the willingness of a consumer to give up consumption of one commodity (X) in exchange for an increase in some other commodity (Y) and remain equally satisfied can be mathematically calculated as their marginal utility of good X divided by their marginal utility of good Y. What is the economic term for this measure or concept?arrow_forwardPlease, explain the difference between a diagram of a demand function and a diagram of such standard function as y = h(x)?arrow_forwardCinnamon Toast Crunch cereal and Trix cereal are considered substitute goods. Because of this, one would predict that, holding all else constant, if the price of Cinnamon Toast Crunch cereal increases, we would seearrow_forward
- I need help with this homework question i am confused on Suppose a consumer’s utility function is given by U(X,Y) = MIN (5X, Y). Also, the consumer has $60 to spend, and the price of good X is P(x) = $5. Let good Y be a composite good (good Y is the “numeraire”) whose price is P(y) = $1. So, on the Y-axis, we are graphing the amount of money that the consumer has available to spend on all other goods for any given value of X. Suppose PX increases to $7, Calculate the Compensating Variation. Calculate the Equivalent Variation.arrow_forwardInferior goods are affordable substitutes for more expensive goods. Which of the following is an example of someone purchasing an inferior good? Tom saved his money for an entire year so that he could buy the nicest car on the lot. Susan decided to buy her favorite pasta, rather than the store-brand pasta that she usually purchases. Sam had to stay within his budget, so he decided to buy generic toaster pastries instead of his favorite brand-name pastries. Jennifer earned a bonus at work, so she decided to go out to dinner at a fancy restaurant.arrow_forward7. Professor Petro considers coffee from La Prep (denoted as good I) and coffee from Tim Horton's (denoted as good h) to be perfect substitutes but he derives much more utility from La Prep coffee. In fact, he thinks 1 cup of coffee from La Prep is as good as 4 cups of coffee from Tim Hortons! This means his utility function over the two coffees is given by U = 4l +h. The price of La Prep coffee is p = 3 and the price of Tim Horton's coffee is pa 1.5. Professor Petro sets aside a total income of m = 60 for coffee each week. For the questions below, treat La Prep coffee (good !) as the good that goes on the horizontal axis of an indifference curve diagram. (b) Solve for Professor Petro's optimal bundle of La Prep and Tim Horton's coffee, (, h"). Show your solution graphically by placing La Prep coffee on the horizontal axis and Tim Horton's coffee on the vertical axis. Label Professor Petro's optimal bundle as bundle "A" and be sure to label all intercepts of the budget line.arrow_forward
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