Suppose a local supermarket runs a discount campaign on the sales of shampoos using discount coupons – any customer who shows a discount coupon will be offered an X% discount on the original retail price. BLACK :X% FRIDAYOFF dreamstime Briefly explain the economics behind this discount campaign. dreamstime

Suppose a local supermarket runs a discount campaign on the sales of shampoos using discount coupons – any customer who shows a discount coupon will be offered an X% discount on the original retail price. BLACK :X% FRIDAYOFF dreamstime Briefly explain the economics behind this discount campaign. dreamstime

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 10PA

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The train fare charged by the local train company is $4.5 during the morning rush hour, but only $2 during the early afternoon. This can be explained by the fact that the demand for train rides during the morning rush hour is _____; but during the early afternoon the demand for train rides is _____: Group of answer choices 1. less elastic; more elastic 2. more elastic; less elastic 3. unit elastic; inelastic 4. more elastic; less inelastic The demand for granola cereal is more price-elastic than the demand for cereals as a whole. This is best explained by the fact that: Group of answer choices 1. granola cereals are a luxury. 2. cereals as a whole are a necessity. 3. there are more substitutes for granola cereals than for cereals as a whole. 4. changes in consumption of cereals as a whole is greater than consumption of granola cereals when prices change.
Jenny has a utility function U(x, y) = 2xy + 1. The price of x is $1 and the price of y is $1, and her income is $20. A. How much x and y does Jenny demand? B. A tax is placed on x so that x now costs Jenny $2 while her income and the price of y stay the same. How much of good x does she now demand? C. Would Jenny be as well off as she was before the tax if when the tax was imposed, her income rose by an amount equal to $1 times the answer to part (b)?
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