Explain why the demand for a particular brand of fast food tends to be more elastic than demand for all fast food.
What will be an ideal response?
One of the factors that affects the price elasticity of demand is the number of substitute goods available. For instance, a particular brand of hamburgers will face many substitutes, including not only other types of fast food but also other brands of hamburgers. If, however, the demand for hamburgers is broadly defined irrespective of different brands, the number of substitutes will be relatively small. Thus, the broader a market is defined, the less elastic is the demand.
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Promoters for the Rolling Stones were clearly "short selling" when
A) they distributed their latest CD to radio stations free of charge. B) they sold their latest CD to retailers at wholesale prices. C) they sold the world-tour concert tickets weeks in advance. D) they promoted the band without Bill Wyman, the original bass player.
Explain why "bad cars drive out the good ones" in the market for used cars
What will be an ideal response?
If Claire's reservation price on a sweater is $37, which of the following prices would she have to observe in the market in order to buy a sweater?
A. $37.01 B. $38.00 C. $37.00 D. Claire would not buy a sweater at any of these prices.
Use the following graph for a competitive market to answer the question below.
Assume the government imposes a $2.25 tax on suppliers, which results in a shift of the supply curve from S1 to S2. The government's tax revenue is
A. $1,050. B. $900. C. $375. D. $675.