Provide an example of the following and indicate the type of income elasticity we may expect...
Provide an example of the following and indicate the type of income elasticity we may expect from each of them and why? a. A normal good b. A necessity c. An inferior good d. Define elasticity
Homework Answers
A. Normal good: Inlastic Good
As demand for normal good increases with an increase in price this it is elastic good. Eg. Mobile phone,Bike
B. Necessity: Perfactly Inelastic
As the good is a necessity thus changes in the prices won't reduce the demand for the product. Eg. Bread, vegetables
C. Inferior Good: Perfactly elastic
As an slight increase in will highly decreaase the demand for the goods because people may switch to luxurious goods in this case.
D. Elasticity: elasticity basically represents the sensitivity or change in one variable with the corrosponding change in the other variable. It could be of various type like income elasticity, demand elasticity. Demand elasticity for instance refers to the change in the demand for a product with change in the price of the product.
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Provide an example of the following and indicate the type of
income elasticity we may expect...
1. For _____ goods, income elasticity is positive. Instructions: You may select more than one answer....
1. For _____ goods, income elasticity is positive. Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. a. normal b. necessity c. luxury d. inferior 2. If a good has an income elasticity of 1.83, then it: a. probably has a lot of close substitutes available. b. is an inferior good, and a necessity. c. is a normal good, and a...
If the income elasticity of demand for a good is -1.5 that good is A. A...
If the income elasticity of demand for a good is -1.5 that good is A. A substitute to another good. B. A complement to another good. C. A normal good. D. An inferior good. E. A necessity good.
QUESTION 10 The price elasticity of demand for gasoline is -0.25. If we expect the price...
QUESTION 10 The price elasticity of demand for gasoline is -0.25. If we expect the price of gasoline to increase by 8 percent, what is the expected change in the quantity of gasoline demanded? A. Quantity declines by 2 percent B. Quantity declines by 8 percent C. Quantity increases by 2 percent D. Quantity declines by 4 percent QUESTION 11 The income elasticity of demand for bananas is -0.1. Is this good normal or inferior? A. Normal B. Neither normal...
Economists estimated that the price elasticity of beer is -0.23 and the income elasticity of beer...
Economists estimated that the price elasticity of beer is -0.23 and the income elasticity of beer is -0.09. This means that A) an increase in the price of beer will lead to an increase in revenue for beer sellers and beer is an inferior good. B) a decrease in the price of beer will lead to an increase in revenue for beer sellers and beer is an inferior good. C) an increase in the price of beer will increase the...
3 22. Provide three separate numerical example and demonstrate how to compute price-elasticity, income-elasticity, and cross-elasticity...
3 22. Provide three separate numerical example and demonstrate how to compute price-elasticity, income-elasticity, and cross-elasticity of demand 23. Provide two different demand lines and demonstrate which one is more elastic 24. Explain the meaning of each of the following a) Absolute value of price elasticity of demand for gasoline is 0.28 in the short-run but 0.58 in the long-run. What explains the difference? b) Income-elasticity of demand for potatoes is +2.3. What kind of good (normal or inferior) potatoes...
Income elasticity of demand Calculate the income elasticity of demand for the following demand functions and...
Income elasticity of demand Calculate the income elasticity of demand for the following demand functions and assess its magnitude (is the good normal, inferior, a luxury or a necessity?). Q =50 -10p + 3Y, at p = 2 and Y = 20 Q = 5 - 20p + 4Y, at p = 1 and Y = 50 Q = 70 – 3p – 2Y, at p = 15 and Y = 5 Q = 35 - 20p + 0.5Y, at...
If a product's income elasticity of demand is -1.7, then we can conclude that Select one:...
If a product's income elasticity of demand is -1.7, then we can conclude that Select one: ut of a. a decrease in income will lead to an increase in demand for the product. b. an increase in income will lead to an increase in demand for the product. c. the product is a luxury good. d. the product is a normal good. e, the product is certainly a necessity
Attempts: Do No Harm: /2 7. Using the income elasticity of demand to characterize goods Data...
Attempts: Do No Harm: /2 7. Using the income elasticity of demand to characterize goods Data collected from the economy of Cardtown reveals that an 18% increase in income leads to the following changes: • A 29% increase in the quantity of houses demanded • A 17% decrease in the quantity of clubs demanded • A 14% increase in the quantity of chips demanded Compute the income elasticity of demand for each good and use the dropdown menus to complete...
Income Elasticity of Demand Normal Or Inferior Good Clubs (-1.22, -0.82, 0.82, 1.22) (Normal, Inferior) Chips...
Income Elasticity of Demand Normal Or Inferior Good
Clubs (-1.22, -0.82, 0.82, 1.22) (Normal, Inferior)
Chips (-1.1, -0.91, 0.91, 1.1) (Normal, Inferior)
Diamonds (-2.73, -0.37, 0.37, 2.73) (Normal, Inferior)
Data collected from the economy of Cardtown reveals that an 11% decrease in income leads to the following changes: • A 9% increase in the quantity of clubs demanded • A 10% decrease in the quantity of chips demanded • A 30% decrease in the quantity of diamonds demanded Compute the...
Question 19 0.25 pts 19. If a commodity's income elasticity of demand is 0.82, then we...
Question 19 0.25 pts 19. If a commodity's income elasticity of demand is 0.82, then we can infer that _ it is a necessity consumers' expenditure on the commodity increases more proportionately with a rise in income it has an inelastic demand curve it is an inferior good
3 22. Provide three separate numerical example and demonstrate how to compute price-elasticity, income-elasticity, and cross-elasticity of demand 23. Provide two different demand lines and demonstrate which one is more elastic 24. Explain the meaning of each of the following a) Absolute value of price elasticity of demand for gasoline is 0.28 in the short-run but 0.58 in the long-run. What explains the difference? b) Income-elasticity of demand for potatoes is +2.3. What kind of good (normal or inferior) potatoes...
If a product's income elasticity of demand is -1.7, then we can conclude that Select one: ut of a. a decrease in income will lead to an increase in demand for the product. b. an increase in income will lead to an increase in demand for the product. c. the product is a luxury good. d. the product is a normal good. e, the product is certainly a necessity
Attempts: Do No Harm: /2 7. Using the income elasticity of demand to characterize goods Data collected from the economy of Cardtown reveals that an 18% increase in income leads to the following changes: • A 29% increase in the quantity of houses demanded • A 17% decrease in the quantity of clubs demanded • A 14% increase in the quantity of chips demanded Compute the income elasticity of demand for each good and use the dropdown menus to complete...
Income Elasticity of Demand Normal Or Inferior Good
Clubs (-1.22, -0.82, 0.82, 1.22) (Normal, Inferior)
Chips (-1.1, -0.91, 0.91, 1.1) (Normal, Inferior)
Diamonds (-2.73, -0.37, 0.37, 2.73) (Normal, Inferior)
Data collected from the economy of Cardtown reveals that an 11% decrease in income leads to the following changes: • A 9% increase in the quantity of clubs demanded • A 10% decrease in the quantity of chips demanded • A 30% decrease in the quantity of diamonds demanded Compute the...
Question 19 0.25 pts 19. If a commodity's income elasticity of demand is 0.82, then we can infer that _ it is a necessity consumers' expenditure on the commodity increases more proportionately with a rise in income it has an inelastic demand curve it is an inferior good
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