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Define the price of elasticity of demand and the income elasticity of demand.
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...
The flatter the demand curve, the ________. lower the elasticity of demand higher the elasticity of demand
If EF is the firm elasticity of demand and EM is the market elasticity of demand, the profit-maximizing markup for a firm operating in a monopolistically competitive industry with Nidentical firms is NEF/ (1 + NEF). NEM O /(1 + NEM). (1 + NEF) / NEF EF O/(1+EF).
Suppose the income elasticity of demand for food is 0.5 and the price elasticity of demand is -1.0. Suppose also that you spends $10,000 a year on food, the price of food is $2, and that your income is $25,000. Ifa sales tax on food caused the price of food to increase to $2.50, what would happen to her consumption of food (i.e. how many units of food does she consume)? (Hint: Because a large price change is involved, you...
what is the price elasticity of demand? why is understanding the elasticity of demand important for health care managers?
How does the price elasticity of demand compare to the income elasticity of demand?
Suppose the income elasticity of demand for food is 0.5, and the price elasticity of demand is -1.0. Suppose also that Felicia spends $10,000 a year on food, and that the price of food is $2 and her income is $25,000. If a $2 sales tax on food were to cause the price of food to double, what would happen to her consumption of food? Suppose that she is given a tax rebate of $5,000 to ease the effect of...
The price elasticity of demand for item A sold -4.0. The price elasticity of demand for item B is -5,0. The marginal cost of item A is $50. The marginal cost of item B is $25. What is the profit maximization point for each item? What needs to happen to ensure the price paid for both items is the same?
find the price elasticity of demand if the demand is given as d= R/2P, where R is the consumers income and P the price