1. The accompanying table shows the price and yearly quantity sold of ice cream cones on Sidfield Island.
Price of Ice Cream Cones Quantity of Ice Cream Cones Demanded
a. Using the midpoint method (show your work), calculate the price elasticity of demand when the price of an ice cream cone rises from $1 to $2. What does this estimate imply about the price elasticity of demand for ice cream cones?
Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price
b. Using the midpoint method (show your work), calculate the price elasticity of demand when the price of an ice cream ...view middle of the document...
The table below indicates the marginal utility she obtains when she purchases this combination.
Quantity Price per Unit MU per unit
Bracelets 5 $1 30
Sodas 4 $1 40
a. A consumer maximizes utility when the last dollar spent on any good generates the same satisfaction as the last dollar spent on every other good. Is this consumer maximizing her utility?
This consumer did not maximize her utility,
b. If not, should she consume more bracelets or more sodas? Explain.
Answer the following assuming that one more bracelet is purchased and one less soda is consumed:
c. Recall the law of diminishing marginal utility. What happens to the Marginal Utility of bracelets and the Marginal Utility of soda?
d. What happens to the Total Utility received?
e. What happens to the total dollars spent?
4. On Tuesday nights, a local restaurant has a kid’s meal special. Nina’s son, Braden likes the restaurant’s chicken nuggets, but Braden seems to be growing bigger every day and the kid’s meal is usually not enough. The restaurant...