Carvel advertises a football-shaped ice cream cake for $7; you can buy a second one for only $4 . What do they know about consumer preferences?
a. Consumers would never buy a second ice cream cake.
b. Two cakes are worth less to the consumer than one.
c. Marginal utility of ice cream cakes diminishes.
d. Consumers only value the first cake at $4.
e. Consumers value all cakes they eat at $4.
C
Economics
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If a buyer in an economic transaction has more information than the seller, the buyer benefits at the expense of the seller. This phenomenon is due to
A) moral hazard. B) adverse selection. C) economically irrational behavior. D) gains from trade.
Economics
When the price of a product is increased 15 percent, the quantity demanded decreases 10 percent. We can therefore conclude that the demand for this product is:
A. Elastic B. Inelastic C. Cross-elastic D. Unitary elastic
Economics