46) How does the introduction of cognition into a consumer\'s choice between hea

Question

46) How does the introduction of cognition into a consumer's choice between healthy and unhealthy food affect marginal utility per dollar and the quantity of healthy and unhealthy food consumed? Assume utility is maximized.

47) When an electronics company advertises on the local newspaper a 10% discount couplon, is this an example of price discrimination? Why or Why not

48) Describe how if a price-fixing game is repeated over and over, the cooperative outcome might be attained.

49) Expain what would happen to the equilibrium price and quantit of oranges if the supply of oranges increased while the demand for oranges decreaed.

50) Will a price ceiling always result a reduction in efficiency?

Explanation / Answer

46) a decade or so back there wouldn't have been anything like a diet coke. with studies stressing on the importance of healthy food consumers now assign more importance to better food items. take the artificial sweetening industry; a niche market that didn't have much use is now stocked at supermarts. consumers are willing to pay as much as twice the amount for healthy foods. this reduces the money that the consumer saves or even reduces hi total consumption. now he has to manage with fewer things. the consumer assigns lesser utility to unhealthy food and it drops drastically with every extra unit.

47) Yes a 10% discount would be considered as price discrimination. As it is noticed only by those who read papers, it effectively creates different price brackets for those reading papers and those not. This one is not like the the typical cases of price discrimination where the prices are different according to income. Another case like this would be newsletters and email subscriptions.

48) Take the cola industry. when one the majors cuts price the other follows. but you will never see that it goes to far down. after a while the prices comes to the original level. this cycle goes on and it may seem like that there might be some understanding(not legal off course) between them.

49) As there are now more people selling oranges and even fewer to buy oranges it would cause a price drop. the seller would rather sell his oranges at slightly lower prices than stay with an unsold lot of oranges this mentality across the spectrum cause a drop.

50) Not necessarily. It might so happen that a price ceiling may help fresh firms enter the market and increase the competition. henry ford for example(certain patents can be considered as price ceilings)

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