Assume that the cost of producing a hardback book is roughly equivalent to producing a paperback book. Explain how and why then do publishing companies charge higher prices for the hardback book and a much lower price for the paperback book
What will be an ideal response?
The hardbound book version typically comes out before the paper bound version is made available. Consumers who have a higher ability and willingness to pay and an aversion to waiting will pay a higher amount of the hardbound version. Those who have a lower ability to pay and a willingness to wait will delay purchase of the book until the paperback version comes out.
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If the demand for a good is elastic, then
A) people do not change the quantity they demand when the price of the good changes. B) a change in price leads to a smaller percentage change in the quantity demanded. C) people substantially decrease the quantity of the good they buy if its price increases by a small percentage. D) a change in the quantity demanded is smaller than the change in price. E) the quantity demanded divided by the price exceeds 1.00.
An organic farm sells tomatoes for 50 cents each at the local farmers market. It only cost them (in the accounting measure) 5 cents to produce each tomato. What happens to GDP with the sale of each tomato?
A) It increases by 5 cents. B) It increases by 45 cents. C) It increases by 50 cents. D) It increases by 55 cents. E) It remains unchanged because organic farmers try not strive for profit.