Next questic When income rises by 2 percent and other things remain the same, the quantity demanded of good C increases by 1 percent. Calculate the income elasticity of demand for good C. Is good Ca normal good or an inferior good? How does the demand for good C change? ..... The income elasticity of demand for good C is >>> Answer to 1 decimal place. Good C is good and as income rises, the demand for good C O A. a normal; decreases OB. an inferior; increases C. an inferior; decreases O D. a complementary; increases O E. a normal; increases

Next questic When income rises by 2 percent and other things remain the same, the quantity demanded of good C increases by 1 percent. Calculate the income elasticity of demand for good C. Is good Ca normal good or an inferior good? How does the demand for good C change? ..... The income elasticity of demand for good C is >>> Answer to 1 decimal place. Good C is good and as income rises, the demand for good C O A. a normal; decreases OB. an inferior; increases C. an inferior; decreases O D. a complementary; increases O E. a normal; increases

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 31CTQ: Economists define normal goods as having a positive income elasticity. We can divide normal goods...

See similar textbooks

Similar questions

Economists define normal goods as having a positive income elasticity. We can divide normal goods into two types: Those whose income elasticity is less than one and those whose income elasticity is greater than one. Think about products that would fall into each category. Can you come up with a name for each category?
Would you expect supply to play a more significant role in determining the price of a basic necessity like food or a luxury like perfume? Explain. Hint: Think about how the price elasticity of demand will differ between necessities and luxuries.
Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the goods you buy has a negative income elasticity, that is, it is an inferior good, what must be true of the income elasticity of the other good you buy?
What is the difference between the demand and the quantity demanded of a product, say milk? Explain in words and show the difference on a graph with a demand curve for milk.
The equation for a demand curve is P=483Q. What is the elasticity in moving from quantity of 5 to a quantity of 6?
Suppose the cross-price elasticity of apples with respect to the price of oranges is 0.4, and the price of oranges falls by 3. What will happen to the demand for apples?
(Other Elasticity Measures) Complete each of the following sentences: a. The income elasticity of demand measures, for a given price, the __________ in quantity demanded divided by the __________ income from which it resulted. b. If a decrease in the price of one good causes a decrease in demand for another good, the two goods are __________. c. If the value of the cross-price elasticity of demand between two goods is approximately zero, they are considered __________.
An increase in the supply of a good will decrease the total revenue producers receive if a. the demand curve is inelastic. b. the demand curve is elastic. c. the supply curve is inelastic. d. the supply curve is elastic.
The equation for a supply curve is 4P=Q. What is the elasticity of supply as price rises from 3 to 4? What is the elasticity of supply as the price rises from 7 to 8? Would you expect these answers to be the same?
What is the relationship between price elasticity and position on the demand curve? For example, as you move up the demand curve to higher prices and lower quantities, what happens lo the measured elasticity? How would you explain that?
Consider the demand for hamburgers. If the price of a substitute good (for example, hot dogs) increases and the price of a complement good (for example, hamburger buns) increases, can you tell for sure what will happen to the demand for hamburger? Why or why not? Illustrate your answer with a graph.
What is the formula for the income elasticity of demand?