Question 1.
Suppose, in deciding what price to set for its latest animated movie, Disney decided to charge either $14.95 or $12.95 for a video or DVD. They estimated the demand for these videos or DVDs to be quite elastic. What price did it choose and why?
Question 2.
Suppose the marginal utility per last dollar spent on hamburgers is greater than the marginal utility per last dollar spent on chocolate malts. Assuming a consumer purchases only hamburgers and malts, what should the consumer do if she wishes to increase her total utility from the consumption of these two goods? Why?
2007-02-26 10:34:42 · 1 answers · asked by mohotbabe 2 in Social Science ➔ Economics
1. Price elastic of demand means that a small change in price will have a larger change in demand. To maximize revenues (price x quantity) they will go with the lower price.
2. Buy more hamburgers, M.U is greater for hamburgers, so consuming more adds more to Total Utility.
2007-02-26 10:51:37 · answer #1 · answered by JuanB 7 · 1⤊ 0⤋