Question 11A supermarket has estimated values of the income elasticity of demand forsome of its products as shown in the table below.A EggsB MilkCDProductCheeseFruitEggsMilkCheeseFruitGiven this information, which product is most likely to be considered anecessity?Income elasticityof demand0.150.601.001.70

Income elasticity of demand is a measure that quantifies the responsiveness of the quantity demanded…

Question 11 A supermarket has estimated values of the income elasticity of demand for some of its products as shown in the table below. Product A Eggs B Milk C D Fruit Cheese Eggs Milk Cheese Fruit Given this information, which product is most likely to be considered a necessity? Income elasticity of demand 0.15 0.60 1.00 1.70

Question 11 A supermarket has estimated values of the income elasticity of demand for some of its products as shown in the table below. Product A Eggs B Milk C D Fruit Cheese Eggs Milk Cheese Fruit Given this information, which product is most likely to be considered a necessity? Income elasticity of demand 0.15 0.60 1.00 1.70

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 15CTQ: Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the...

See similar textbooks

Similar questions

The Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decayfigh ter, reduced the price of its electric toothbrush from $35 to $30. As a result, Stopde cays sales declined by 1,500 units per month. What is the arc cross elasticity of demand between Stopdecays toothbrush and Decayfighters toothbrush? What does this indicate about the relationship between the two products? If Stopdecay knows that the arc price elasticity of demand for its toothbrush is 1.5, what price would Stopdecay have to charge to sell the same number of units as it did before the Decayfighter price cut? Assume that Decayfighter holds the price of its toothbrush constant at $30. What is Stopdecays average monthly total revenue from the sale of electric toothbrushes before and after the price change determined in part (b)? Is the result in part (c) necessarily desirable? What other factors would have to be taken into consideration?
The equation for a demand curve is P=2/Q. What is the elasticity of demand as price falls from 5 to 4? What is the elasticity of demand as the price falls from 9 to 8? Would you expect these answers to be the same?
Why is the supply curve with constant unitary elasticity a straight line?
According to the previous discussion, what factors influence the price elasticity of demand for cigarettes? What other factors not mentioned in the article might influence the price elasticity of demand for cigarettes?
The avenge annual income rises from 25,000 to 33,000, and the quantity of bleed consumed in a year by the avenge person falls from 30 loaves to 22 loaves. What is the income elasticity of bread consumption? Is bread a normal or an inferior good?
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.
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?
The supply of paintings by Leonardo Da Vinci, who painted the Mona Lisa and The Last Supper and died in 1519, is highly inelastic. Sketch a supply and demand diagram, paying attention to the appropriate elasticities, to illustrate that demand for these paintings will determine the price.
The equation for a demand curve is P=483Q. What is the elasticity in moving from quantity of 5 to a quantity of 6?
What is the formula for the income elasticity of demand?
Why is the demand curve with constant unitary elasticity concave?
What does a price elasticity of demand of 0.39 mean?