Emily's income is $120. She spends her entire income on books. Emily considers paperback and electronic...
Emily's income is $120. She spends her entire income on books. Emily considers paperback and electronic books to be perfect substitutes, and she is always indifferent between one paperback book and one electronic book. Initially, the price of a paperback book is $15 and the price of an electronic book is $10. Then the price of a paperback book falls to $8. Which of the following statements is true?
a) For paperback books, the income and substitution effects have the opposite sign.
b) For paperback books, both income and substitution effect are zero.
c) For paperback books, the income effect is 3 and the substitution effect is 12.
d) For paperback books, the income effect is 4 and the substitution effect is 9.
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Emily's income is $120. She spends her entire income on books.
Emily considers paperback and electronic...
Suppose Sue considers orange and apple to be perfect two-for-three substitutes and spends $30 income only...
Suppose Sue considers orange and apple to be perfect two-for-three substitutes and spends $30 income only on these two goods. Orange costs $2/lb, while apple costs $1/lb. Find Sue's optimal consumption bundle. What will be the income and substitution effects of an increase in the price of apple to $2/lb? What will be Sue's optimal consumption bundle after the increase in the price of apple to $2/lb?
Alicia is a rational consumer who spends her monthly income of $1,000 on coffee and books....
Alicia is a rational consumer who spends her monthly income of $1,000 on coffee and books. The last cup of coffee she bought in January gave her a marginal utility of 5, and the last book she bought in January gave her a marginal utility of 10. Which of the following statements do we know is true? O Alicia spent more money on coffee than on books. Alicia bought more books than cups of coffee. Alicia did not spend her...
Question 1: Louis the retired Canadian lives on a fixed budget and consumes only two goods:...
Question 1: Louis the retired Canadian lives on a fixed budget and consumes only two goods: toques (T) and maple syrup (M). Suppose Louis monthly budget is 100 and the price of the two goods are (PT,PM) (4,2). (a) Make a properly labeled diagram illustrating Louis'budget constraint with T on the hori- zontal axis and M on the vertical axis. Indicate the area corresponding to the set of bundles (M, T) that Louis can afford. (b) What is the maximum...
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Q1. Sarah has decided to spend always $200 on clothing
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A. Sarah’s price elasticity of demand is one because she is
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B. Sarah’s income elasticity of demand is equal to zero because her
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This case presents two phases of a large business transformation project involving the implementation of an ERP system with the aim of creating an integrated company. The case illustrates some of the challenges associated with integration. It also presents the obstacles facing companies that undertake projects involving large information technology projects. Bombardier and Its Environment Joseph-Armand Bombardier was 15 years old when he built his first snowmobile...
Alicia is a rational consumer who spends her monthly income of $1,000 on coffee and books. The last cup of coffee she bought in January gave her a marginal utility of 5, and the last book she bought in January gave her a marginal utility of 10. Which of the following statements do we know is true? O Alicia spent more money on coffee than on books. Alicia bought more books than cups of coffee. Alicia did not spend her...
Question 1: Louis the retired Canadian lives on a fixed budget and consumes only two goods: toques (T) and maple syrup (M). Suppose Louis monthly budget is 100 and the price of the two goods are (PT,PM) (4,2). (a) Make a properly labeled diagram illustrating Louis'budget constraint with T on the hori- zontal axis and M on the vertical axis. Indicate the area corresponding to the set of bundles (M, T) that Louis can afford. (b) What is the maximum...
Q1. Sarah has decided to spend always $200 on clothing
per month. Which one of the statements below is true?
A. Sarah’s price elasticity of demand is one because she is
maintaining her clothing expenditures as a constant fraction of the
price.
B. Sarah’s income elasticity of demand is equal to zero because her
clothing expenditure does not depend on the price.
C. Sarah’s income elasticity of demand is infinite because she is
willing to spend a huge amount of...
How can we assess whether a project is a success or a
failure?
This case presents two phases of a large business transformation project involving the implementation of an ERP system with the aim of creating an integrated company. The case illustrates some of the challenges associated with integration. It also presents the obstacles facing companies that undertake projects involving large information technology projects. Bombardier and Its Environment Joseph-Armand Bombardier was 15 years old when he built his first snowmobile...
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