PROBLEM 1: Lovin’ the Fast Food The following article was written for an ag-econ journal several years ago. The demand function is written in table format on the next page. This page has the averages for the different variables and the second page has the regression output. 1. Calculate the fast food price elasticity for fast food for 1982 and 1992. What does it mean? How could Chic-Fil-A use this information? Is it changing? PEoD = (% Change in Quantity Demanded)/(% Change in Price) 2. Calculate the grocery cross-price elasticity for fast food for 1982 and 1992. What does it mean? How could Chic-Fil-A use this information? Calculate the ‘inexpensive’ and ‘expensive’ restaurant price cross-price elasticity. What do these mean and how useful is this information? 3. Calculate the income elasticity of fast food in 1982 and 1992. Again, explain the trend and meaning. 4. Identify at least four ‘take-aways’ from this demand function. Identify the relationship that is shown (or not shown), what information can be drawn from the information and how a fast-food restaurant can use this. Only one of your ‘take-aways’ here can relate specifically to cross-price elasticities. Problem 2 Jones Has A Student . . . Several years ago I had a student who approached me about leaving school. This student had, what he thought, was an amazing idea. Doug’s idea (I’ve changed the name to protect the innocent) was this: move to a medium sized city (Charleston, SC) and open up a jewelry business. His reasoning was that when jewelers resize gold rings (wedding bands), they get to keep the little pieces of scrap gold. As gold was approaching record prices, Doug would make a ton of profit. a. Draw a graph/figure of the type of market Doug is entering—assume that he makes profits out of the gate. b. Explain how the market moves given that Doug makes a profit. That is, tell me what is likely to happen. Show a graph (or graphs) that explain this phenomena. c. How is it possible that firms can operate with zero economic profit? Tell me a story why it must be that the last firm entering the market experiences zero economic profit (i.e. What if the last firm in the market experienced positive economic profit? Is there anything wrong with that?) Problem 3 Economics is a Curious Thing Please choose three of the following economic phenomena and give me your reasons why we see these events occur in the market. The more you think like an economist the more you see economics in the market. (Don’t waltz through these as they are all examples of economics.) a. Why do brides buy their wedding dresses for thousands of dollars while bride-grooms (yes, I’m from Middle-England) rent their tuxedos for a hundred dollars? b. Why is the internet free at Motel 6 but costs $9.99 per day at the Ritz? c. Why do ATM machines in the drive-through have brail number pads? d. Why do airlines give frequent flyers two free checked bags but charge for checked bags for non-frequent flyer.

1. PROBLEM 1: Lovin’ the Fast Food
The following article was written for an ag-econ journal several
years ago. The demand function is written in table format on the
next page. This page has the averages for the different variables
and the second page has the regression output.
1. Calculate the fast food price elasticity for fast food for 1982
and 1992. What does it mean? How could Chic-Fil-A use this
information? Is it changing?
PEoD = (% Change in Quantity Demanded)/(% Change in Price)
2. Calculate the grocery cross-price elasticity for fast food
for 1982 and 1992. What does it mean? How could Chic-Fil-A
use this information? Calculate the ‘inexpensive’ and
‘expensive’ restaurant price cross-price elasticity. What do
these mean and how useful is this information?
3. Calculate the income elasticity of fast food in 1982 and
1992. Again, explain the trend and meaning.
4. Identify at least four ‘take-aways’ from this demand
function. Identify the relationship that is shown (or not shown),
what information can be drawn from the information and how a
fast-food restaurant can use this. Only one of your ‘take-aways’
here can relate specifically to cross-price elasticities.
Problem 2 Jones Has A Student . . .

2. Several years ago I had a student who approached me about
leaving school. This student had, what he thought, was an
amazing idea. Doug’s idea (I’ve changed the name to protect the
innocent) was this: move to a medium sized city (Charleston,
SC) and open up a jewelry business. His reasoning was that
when jewelers resize gold rings (wedding bands), they get to
keep the little pieces of scrap gold. As gold was approaching
record prices, Doug would make a ton of profit.
a. Draw a graph/figure of the type of market Doug is
entering—assume that he makes profits out of the gate.
b. Explain how the market moves given that Doug makes a
profit. That is, tell me what is likely to happen. Show a graph
(or graphs) that explain this phenomena.
c. How is it possible that firms can operate with zero
economic profit? Tell me a story why it must be that the last
firm entering the market experiences zero economic profit (i.e.
What if the last firm in the market experienced positive
economic profit? Is there anything wrong with that?)
Problem 3 Economics is a Curious Thing
Please choose three of the following economic phenomena and
give me your reasons why we see these events occur in the
market. The more you think like an economist the more you see
economics in the market. (Don’t waltz through these as they are
all examples of economics.)
a. Why do brides buy their wedding dresses for thousands of
dollars while bride-grooms (yes, I’m from Middle-England) rent
their tuxedos for a hundred dollars?
b. Why is the internet free at Motel 6 but costs $9.99 per day
at the Ritz?
c. Why do ATM machines in the drive-through have brail
number pads?
d. Why do airlines give frequent flyers two free checked bags
but charge for checked bags for non-frequent flyers?
e. Why did the price of fish decrease and the elasticity of fish
increase after Vatican II?

3. f. Why does Las Vegas offer free drinks to gamblers but
charge very high prices to patrons in bars?
g. Why do people spend (on average) three weeks shopping
for a car to save $200 yet don’t spend time clipping coupons to
save $200 on groceries ?
h. [Your own economic conundrum from veils to veal: List
the phenomena and write your own solution.]
Running of the Brides
All About Filene's Basement's Bridal Gown Sale
By Lei Lydle, Founder and Editor
I'm sure you have seen it on television or at least heard about it
- hundreds of women rushing to racks and racks of designer
wedding gowns and trying them on in the aisles. I believe they
made reference to it on "Friends" a few seasons back when
Monica was planning her wedding to Chandler. Remember? All
of the brides were running around grabbing dresses off the
racks... brides, including Monica, were fighting over gowns...
I really can't remember if that was supposed to be Filene's or
another store but it definitely wasn't something that was made
for television. It is an actual event, a "wild scene", that has
been repeated every year since 1947 at the world famous
Filene's Basement in Boston, Atlanta and other cities around the
country.
So what is the big deal about this particular bridal gown sale?
According to Filene's Web site, basement buyers accumulate
gowns from a variety of sources including manufacturer's
samples, overstocks, canceled orders, excess merchandise, etc.
Many of the dresses still have their original price tags and may
be priced in the thousands. So, when these buyers have
accumulated at least 1000 gowns they set a date for the "sale"
and price all dresses at $249 each.
The morning of the sale, brides, mothers and friends begin
lining up early. Usually by the time the doors open at 8am,

4. hundreds of women are waiting in line. According to the Web
site, "when the crowd is let loose, it takes less than 60 seconds
for the racks to be stripped bare". Evidently the women just
grab as many dresses as they can, go off in a corner, strip down
and start trying them on. Then the brides start bartering with
each other for dresses until they find the perfect gown (for only
$249).
Call me crazy but this sounds fun...and maybe a little dangerous
at the same time :-)
Tips For Success
Since this may be something new to you, following are some
tips for success from the Filene's Web site and my comments as
well:
1. Get there early or get there late.
Evidently, there is a better selection early but less frenzy later.
2. Leave all men at home, but do bring female help.
I imagine it could be strange for men since there will be
hundreds of women stripping down right there in the store...
3. Identify your team.
This is quite funny but I imagine it is helpful. The Filene's Web
site suggests you and your "team" wear matching colors, hats,
etc. (something that will help you find each other in a crowd...)
4. What to wear:
Leotard or sports bra and bike shorts to try on dresses
anywhere, sneakers of comfortable shoes...
5. Leave your handbags at home.
Carry your belongings in a fanny pack or have a friend carry
them.
6. Think creatively.
Since these dresses are so inexpensive, it may be worth the cost
of alterations if the gown you love doesn't fit perfectly.
7. Be open-minded.
Certain dresses look best on certain bodies. Don't pass up a

5. dress just because it isn't what you had in mind - it may look
awesome on you!
8. Be courteous.
This is just common sense. Everyone is there for the same thing
- to find the perfect dress. If you are nice and help someone out
they will be nice and help you - I hope!
9. Be fair.
Again, everyone is there for the same thing. So give up your
dresses as quickly as possible so that other brides have a chance
to try them on.
10. Have fun!
Hopefully you will find the dress of your dreams but if not, you
will probably always remember your trip to Filene's.
My Experience At The Sale
Well I got up early to go check out the sale this morning. When
I arrived at 7:30, hundreds of women were lined up outside of
each entrance to the Filene's store here in Atlanta. Most that I
asked said that they started arriving at 6:00 in the morning but
some were there earlier and a few women started camping out
the day before!
In addition to the groups of anxious women, there were also
news cameras and vans, radio station personalities, bridal
magazine reps, and security personnel all over the place. I
really couldn't believe all of the media attention surrounding
this sale!
Anyway, although I saw some women that appeared to be there
alone, most were in groups and many chose to wear novelty
head bands so they could find each other once inside the store.
At about 5 minutes before opening, the security personnel begin
unlocking the doors. At that point, some of the women who
were further back in the line started to come to the front. I was
very surprised when the women closer to the front of the line
yelled "No" almost in unison as is if it were planned.
I even witnessed a verbal argument between a mother-of-the-
bride and an unrelated young woman. The mother had arrived

6. early and had been waiting at the front of the line all morning.
But as the 8am hour drew near, younger girls started inching
toward the front. This particular young woman attempted
breaking in front of this mother and a verbal argument ensued. I
really wish I would have had my video camera!
So one or two minutes after that, a gentleman that works at
Filene's (possibly the manager) came out and addressed the
crowd. He told the women not to run but to walk. He said that
there were over 1000 dresses inside so there were definitely
enough dresses for everyone to get a dress. Then he walked
back inside and they opened the doors....
Evidently no one listened to the store manager's announcement
because as soon as those doors opened the girls were off and
running.
It took less than a minute for everyone to get inside the store.
There was a traffic jam on the stairs and escalator. I even heard
someone on the escalator screaming but I couldn't see what was
happening because of the large crowd.
While everyone was trying to get up the stairs and escalators, I
just leisurely got on the elevator with a few other clever brides
and we got to the 2nd floor right away. Since I was taking
photos, I didn't even enter the store until all of the brides had
entered the store. Even so, it took me less than 2 minutes to
enter the store and get upstairs to where the gowns were.
I have to say it was totally crazy up there. There were so many
people, I couldn't even figure out where the gowns were. I later
realized that I couldn't see the gown racks because the racks
were already stripped bare!
Many women were carrying around as many gowns as they
could hold. I saw brides that wore bikinis as underwear - pretty
good idea. I also saw people carrying around signs that
indicated what sizes they were looking for - another good idea!
Filene's has lots of dressing rooms and people were lined up
waiting for them, but many, many women chose to try on
dresses in the aisles. There were lots of men and news cameras
there but these women didn't seem to care. I even saw one news

7. camera focusing in on and talking to one bride while she was
dressing - I couldn't believe it!
I also saw the security personnel walking around holding up lost
cell phones and pieces of lost clothing.
Due to the chaos (and large numbers of undressed women), I
was unable to get any good photos inside. Trust me when I say
it was a wedding gown frenzy!
The good news is that I saw several women purchasing gowns
so I guess this sale/event was worth it for these brides. And it
was a lot of fun too!
An Important Note
This sale is only a one-day sale and the gowns are not
returnable.
QUESTIONS:
a. How does this market work/look and how does the market
for wedding gowns usually look? (What is the diagram for this
market? What is the diagram for wedding gowns usually?)
b. How many markets are there (in this one example)?
c. Is this market (or the many markets you see here)
efficient? Explain.
d. If you were going to change this market a little bit (for
whatever reason), how would you change it? Explain and show
on a diagram.
e. Can you use any additional ‘price and prejudice’ ideas in
this market (apart from what they are doing)? Identify three and
explain them thoroughly.
Question 1
1.
You are giving a speech of presentation honoring a notable
news reporter. Your research shows that the audience does NOT
know the name of the individual being honored. How should
you organize your presentation speech?
Answer

8. Start by announcing the purpose of the award then announce the
name of the recipient. Finally explain why that person was
selected.
Begin with specific comments about the recipient and end with
general comments summarizing the reasons for the presentation.
Keep the audience guessing, start with general comments that
could refer to anybody, gradually move to specific comments,
and announce the recipient.
Announce the award without stating the news reporter's name.
Question 2
All of the following suggestions are guidelines for a speech to
entertain EXCEPT:
Answer
have a central theme.
use appropriate humor.
actuate the audience.
be organized.

9. Question 3
Lincoln's Gettysburg Address is an example of a speech:
Answer
to entertain.
of presentation.
of acceptance.
of tribute.
Question 4
The speech that confers an award, a prize, or some other form
of special recognition on an individual or a group is known as
what type of special occasion speech?
Answer
Speech of introduction
Speech of presentation
Announcement
Videotaped speech
Question 5
When answering a question from the audience in a public
gathering, what must you never do?
Answer

10. If you don't know the answer, admit it.
Be methodical when giving lengthy answers.
Check the response with the questioner.
Assume anything you say is off-the-record.
Question 6
When dealing with a question from the audience, the first thing
to do is:
Answer
answer the question.
compliment the question.
repeat or clarify the question.
check the response with the questioner.
Question 7
When preparing a speech to entertain, which of the following
guidelines will NOT help you adapt your humor to the audience,
the occasion, the topic, and your style?
Answer
Good humor must be relevant to the audience and the purpose of

11. your speech.
Humor that is off-color is off-limits.
Avoid humor at the expense of others.
Negative humor is appropriate and encouraged in most
situations.
Question 8
An acceptance speech is a response to a speech of:
Answer
introduction.
tribute.
presentation.
entertainment
Question 9
What is a speech of presentation?
Answer
A speech honoring a person, group, or event
A speech introducing a featured speaker to an audience

12. A speech conferring an award, a prize or some other recognition
A speech persuading the audience to donate clothing
Question 10
A speech of __________ introduces a featured speaker to an
audience.
Question 11
A speech of __________ is a speech conferring an award, a
prize, or some other recognition on an individual or group.
Question 12
The second guideline for the acceptance speech is to
compliment the __________.
Question 13
A speech to __________ is a speech used to make a point
through the creative, organized use of the speaker’s humor.
Question 14
A time set aside at the end of a speech for the audience to
formally interact with the speaker is known as the __________
period.
Question 15
One of the guidelines for the speech of tribute is for the speaker
to be __________.
Question 16
In a public gathering, there is no such thing as a(n) __________
statement.
Question 17
How would you structure your speech of presentation if your
audience already knows who won the award?

13. Your response should be at least 75 words in length. You are
required to use at least your textbook as source material for
your response. All sources used, including the textbook, must
be referenced; paraphrased and quoted material must have
accompanying citations.
Question 18
Describe the four guidelines for an acceptance speech.
Your response should be at least 75 words in length. You are
required to use at least your textbook as source material for
your response. All sources used, including the textbook, must
be referenced; paraphrased and quoted material must have
accompanying citations.
Question 19
Choose a recently deceased public figure and use the guidelines
for the speech of tribute to write a eulogy for that person.
Your response should be at least 200 words in length. You are
required to use at least your textbook as source material for
your response. All sources used, including the textbook, must
be referenced; paraphrased and quoted material must have
accompanying citations.
Question 20
Write a few paragraphs providing advice for a classmate who
has to present the keynote speaker at your school’s graduation
ceremony. What should your classmate say and/or do during the
speech? What should he/she not say and/or not do?
Your response should be at least 200 words in length. You are
required to use at least your textbook as source material for
your response. All sources used, including the textbook, must
be referenced; paraphrased and quoted material must have
accompanying citations.