ZuoTi.Pro
Question

Due to a faltering economy, consumer incomes declined by 10% and purchases of televisions fell by 20%. Calculate and int...

Due to a faltering economy, consumer incomes declined by 10% and purchases of televisions fell by 20%. Calculate and interpret the income elasticity for televisions. Group of answer choices A. The income elasticity is equal to 2, which indicates that televisions are an inferior good. B. The income elasticity is equal to 0.5, which indicates that televisions are a normal good. C. The income elasticity is equal to 2, which indicates that televisions are a normal good. D. The income elasticity is equal to 0.5, which indicates that televisions are an inferior good.

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Income elasticity of demand measures the responsiveness of change in quantity demanded of a good whenever there is a change in the income all the consumer. it is the ratio of percentage change in the sales to the percentage change in the income. Accordingly the income elasticity of demand is computed as -20%/-10% = +2.0. Since the income elasticity of demand is positive, televisions are normal good.

Select option C.

0 0
Add a comment
Know the answer?
Add Answer to:
Due to a faltering economy, consumer incomes declined by 10% and purchases of televisions fell by 20%. Calculate and int...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • A 10% decrease in consumer incomes leads to a 20% decrease in the quantity demanded of...

    A 10% decrease in consumer incomes leads to a 20% decrease in the quantity demanded of Good D. The income elasticity of this good is: This good can best be described as: A.) inferior and luxury B.)inferior and necessity C.)Normal and necessity D.)Normal and luxury

  • If over the last twenty years consumer incomes declined by 20% and consumption of public transport...

    If over the last twenty years consumer incomes declined by 20% and consumption of public transport increased by 10%, which of these statements must be true? A. Public transportation’s demand curve is downward sloping. B.Public transportation must have decreased its prices by more than 20%. C.Public transportation is an inferior good.

  • 2. Table 2 presents the representative income elasticities for three categories of goods: Transportation,     Food,...

    2. Table 2 presents the representative income elasticities for three categories of goods: Transportation,     Food, and nonfed Ground Beef. (Note: Nonfed ground beef comes from cattle that have not been fed a special     diet to produce more tender beef. Most cattle are fed corn for 90 to 120 days before going to market and thus     produce more tender beef than nonfed cattle.) In Table 2 below, the elasticity is interpreted as the percentage change in the quantity...

  • Q1) Total government spending in the U.S. economy was around _____ of the GDP in the...

    Q1) Total government spending in the U.S. economy was around _____ of the GDP in the financial year 2010. Group of answer choices 36 percent 44 percent 5 percent 16 percent 25 percent Q2) The lowest of the federal or state minimum wage levels prevails in each state.​ Group of answer choices True False Q3) The market process ensures that, when all transactions are voluntary, resources get allocated to ​the use where they are valued the most. Group of answer...

  • Question 2 (20 points) A consumer purchases two goods x ano y. The consumer's income is...

    Question 2 (20 points) A consumer purchases two goods x ano y. The consumer's income is 1. Hi S income is 1. His utility is given by is * and y. Px is the price of x. Py is the price of a) Calculate consumer's optim U(x,y) = xy s optimal choice of x and y under his budget.hu uncompensated demand) b) Derive the indirect utility function. c) Are these two goods normal goods? Why d) Derive the expenditure function....

  • If personal consumption is $100, investment is $50, government purchases total $25, imports equal $20, and...

    If personal consumption is $100, investment is $50, government purchases total $25, imports equal $20, and exports equal $10, then GDP equals: A. $175 B. $165 o $155 D. $145 QUESTION 7 Suppose that a customer's willingness to pay for a product is $5, and the seller's willingness to sell is $2. If the negotiated price is $3, how much is consumer surplus? A. $1 QUESTION 8 If an increase in income leads to an increase in the demand for...

  • 1.The purchasing power of the $20 bill increases over time due to inflation. Group of answer...

    1.The purchasing power of the $20 bill increases over time due to inflation. Group of answer choices True False 2.The consumer price index increased from 120 to 132. If you received a raise equal to 10% during this time period then your real income has decreased. Group of answer choices True False 3.Productivity is measured by calculating the growth rate of real GDP. Group of answer choices True False 4.The labor force is made up of all people who are...

  • Answer the following questions and show all working. Use the midpoint formula to calculate elasticities. 1.   ...

    Answer the following questions and show all working. Use the midpoint formula to calculate elasticities. 1.    If the price elasticity of demand is 4.0 (in absolute terms), then a 10% off sale would lead to what change in quantity demanded? Let’s say customer purchases were 200,000 before the sale, what would be the total number of customer purchases after the sale? (4) show working 2.    The price of stadium seats at a baseball game increases from $20 to $30 and...

  • (1) Calculate the government spending multiplier if, an increase in government spending by $5 million increases...

    (1) Calculate the government spending multiplier if, an increase in government spending by $5 million increases real GDP by $20 million. Group of answer choices 0.20 0.25 2 5 4 (2) A major benefit of automatic stabilizers is that they: Group of answer choices guarantee a balanced budget over the course of the business cycle. have a tendency to reduce the national debt. moderate the effect of fluctuations in the business cycle. require legislative review by Congress before they can...

  • BUS 202                                         &n

    BUS 202                                                                                                         Thursday, March 12, 2020In-Class Group HW #6  (40pts)                                                                           class time #____          Questions 1-8 are 2 points each. Question 9 is 10pts. And Q 10 is 14 points. 1. . Use the demand curve diagram above to answer the following question.  What is the own-price elasticity of demand as price increases from $2 per unit to $4 per unit? Use the mid-point formula in your calculation. a) -1/3. b) -6/10. c) -2/3. d) None of the above. 2. Suppose that a 2% increase...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT