Reference no: EM131865262

During a class, a number of students were amused when they thought I had made an obscene gesture while pointing to something overhead. I hadn't, but it reminded me of a story. In spring 2000, I was taking a taxi from a conference center in rural Bavaria, Germany, to the Munich airport. Another driver did something really stupid, and I told the taxi driver that in the US I would have given the driver an obscene gesture. He said, he would, too, but there is a fine of 500 deutschemarks( about $240) in Bavaria for doing that. I asked if there were other fines, and he mentioned a fine of 300 deutschemarks for giving a certain other obscene gesture.

The questions are:

(1) Do these fines reduce the number of gestures given(do people move up the demand curve as price rises)?

(2) To what extent are different gestures substitutes whose consumption depends on the relative prices(fines)?

(3) More generally, what is the price elasticity of demand for giving obscene gestures?

How elastic do you think your own behavior would be in response to a difference in fines for different gestures? If chances that you might be caught increases, what happens too your price elasticity of demand for giving obscene gestures?