Question

Consider the following excerpt: "Steve Cannon, CEO of the AMB Group, Blank's holding company, told ESPN that although food and beverage prices were 50 percent lower in its new Mercedes-Benz Stadium than the prices in the Georgia Dome the previous year, fans spent 16 percent more." If there has been no change in the demand for concessions at football games, which of the following is true? a. Concessions are an inferior good Ob.Demand for concessions is always elastic O c. At the initial prices, demand was inelastic. Od. The demand curve for concessions slopes upwards. QUESTION 7 In a 2014 study, the South Carolina Legislative Audit Council found that people eaming $35,000 or less spent the highest amount of money on the lottery by income group. Based upon this, we can say that a. Lottery tickets are a complementary good b. Lottery tickets are luxury goods c. Lottery tickets are an inferior good d. Demand for lottery tickets is inelastic

Answer 1

6) In this case, considering no change in overall consumer demand for concessions, the expenditure on foods and beverages increased by 16% in response to a 50% reduction in the price of the food and beverages. The expenditure method of estimating the price elasticity of demand of any commodity or service involves a mathematical comparison between the percentage change in the price of that particular commodity or service and the percentage change in the consumer expenditure on the same. Now, based on the expenditure method of calculating price elasticity of demand for any particular good or service, the demand for concessions would be elastic in this case as the due to a certain percentage or proportionate decrease in the price of the food and beverages, the overall expenditure on concessions actually increased which signify that concessions can be considered as demand elastic. Therefore, the correct answer, in this case, would be option b. or Demand for concessions is always elastic.

7) The information provided in this question essentially implies that that low-income groups or sections in the overall population are generally more interested to purchase lottery tickets compared to their high-income group counterparts. It basically indicates that as the income of people increases the demand for lottery tickets decreases progressively. Therefore, based on the given information lottery tickets can be considered as an inferior good. Hence, the correct answer, in this case, would be option c. or Lottery tickets are an inferior good.

8) Considering everything else constant and barley as one of the essential inputs or ingredients used in the production of beer, a decrease in the worldwide production or yield of barley due to global warming would consequently reduce or decrease the production of beer as well. This would essentially cause the quantity supplied of beer to decrease and the price of the beer to increase in the global market, again considering all the other relevant market factors as constant in this instance. Therefore, the correct answer, in this case, would be option b. or An increase in the price and decrease in the quantity.