Explain why short-run demand for frozen fish sticks may be more price elastic in the short run than in the long run
What will be an ideal response?
Frozen fish sticks can be stored. If frozen fish sticks go on sale you can buy large quantities and store them in your freezer. Thus, you may be more sensitive to price changes in the short run.
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When the price of hot dogs is $1.50 each, 500 hot dogs are sold every day. After the price falls to $1.35 each, 510 hot dogs are sold every day. At the original price, what is the price elasticity of demand for hot dogs?
A. 0.2 B. 66.67 C. 2 D. 5
Dollar bills, rare paintings, and emerald necklaces are all
a. media of exchange. b. units of account. c. stores of value. d. All of the above are correct.
Shin likes to spend a (relatively small) portion of his income on vacations to Cabo San Lucas (a popular resort area in Mexico)
On these trips, he either stays at a four star resort with panoramic ocean views or a more modest, and slightly deteriorating hotel in the noisy part of town. Understandably, the four star hotel is significantly more expensive. Suppose that the four-star hotel costs $5000/trip while the hotel costs just $500/trip. In recent years, the price of airfare has risen significantly, a change that effects the cost of his trips the same regardless of where he stays. Suppose that airfare has increased from $300/trip to $1000/trip. Why is it that following the higher travels prices, Shin is likely to spend more of his vacations at the four star resort when he travels. (Assume that the hotel rates and Shin's preferences are fixed).
Suppose the cost of producing two goods, x and y, can be represented as C = ax + by + cxy. If there are diseconomies of scope, then which of the following must be TRUE?
A) a = b B) a + b = -c C) c > 0 D) c < 0