The price decreases from $2,000 to $1,800. Quantity demanded per year increases from 5000 to 6000 units. Which of the following is correct? Select one: a. The good is inferior b. O c. O d. Income elasticity is + 2 Income elasticity is + 0.5 The price elasticity of demand is -1.72

The price decreases from $2,000 to $1,800. Quantity demanded per year increases from 5000 to 6000 units. Which of the following is correct? Select one: a. The good is inferior b. O c. O d. Income elasticity is + 2 Income elasticity is + 0.5 The price elasticity of demand is -1.72

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 2CQQ: The price of a good rises from 8 to 12, and the quantity demanded falls from 110 to 90 units....

See similar textbooks

Related questions

Q: How will each of the following scenarios impact the market for labour . The central bank conducts an…

A: The central bank of the country controls the money supply. Money demand depends on the interest…

Q: The price of gummy bears, a close substitute for jelly beans, increases. 3. According to the event…

A: Here, it is given that gummy bears and jelly beans are close substitutes, which implies that one of…

Q: Use the information in the table below to compute Steve's income elasticity of demand for…

A: Here, given table provides information about the income per week and the change in quantity demanded…

Q: Define a put and call on the British pound sterling.

A: Options is a kind of derivative security. Due to the price of an option being inextricably connected…

Q: a. Use the table below to help you answer the following questions. How many bushels How much revenue…

A: Total revenue refers to the sum of all the revenue earned from all the units sold. Marginal revenue…

Q: O b. The combination of deposit taking and lending with securities underwriti O c. The combination…

A: The Glass Steagall Act of country U was implemented in 1933 after the Great Depression of 1929. The…

Q: Duopoly Market for mechanical pencils can be described by the following demand schedule: Price |…

A: Demand Schedule - $6 | 80$5 | 200$4 | 320$3 | 440$2 | 560$1 | 680$0 | 800 => Fixed Cost = 340…

Q: ssuming equilibrium for gold is one hundred times the price of silver, $Au = 100$Ag, which of the…

A: Arbitrageur: An arbitrageur is an investor who can earn a significant amount of profit by purchasing…

Q: You keep your checking account in Alpha Bank, which is in great financial shape. However, Beta Bank,…

A: In the spheres of banking, consumer confidence is a topic of very high importance. Entrepreneurs in…

Q: Solution: The bank gap = Rate sensitive - Rate sensitive assets liabilites Bank gap = : Bank gap =…

A: The debt or borrowings that a firm owes is known as liabilities. Assets are properties or…

Q: 1) Which of the following is not a characteristic of a monopoly? A monopolist is able to charge a…

A: There are primarily four types of market structures that are monopoly, monopolistic, oligopoly, and…

Q: Comcast has a cable monopoly. The following graph shows the demand, MR, and MC curve of Comcast. Use…

A: A monopolist maximizes profit by equating MR and MC. Now if government imposes tax it increases…

Q: Q2. Suppose the wage ratio of skilled labor v.s. unskilled labor, wH/wL, is highest in country A,…

A: The wage ratio of skilled labor v.s. unskilled labor, wH/wL, is highest in country A, intermediate…

Q: The government places a production fee on jelly beans. 7. According to the event above, which graph…

A: Equilibrium is determined by the intersection of the demand and supply curves. Demand curve is…

Q: 1 Would you say chart 4 is a technical or a fundamental analysis 2 give a reason for your answer

A: Statistical methods refer to the procedure that involves studying the behavior of data and drawing…

Q: Suppose that a binding output quota is imposed on this market at quantity Q₁. The total economic…

A: Economic surplus is the sum of consumer surplus and producer surplus Consumer surplus is the area of…

Q: Consider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.50. That is,…

A: Consumption Function is a function of disposable income and the latter is the income which is…

Q: The elimination principle discussed in this chapter tells us what we can expect in the long run from…

A: Under perfect competition there are a large number of buyers and sellers in the market. Each firm…

Q: Outdoors season is underway in Minnesota, and Tiana and her dad are planning a weekend fishing trip.…

A: Based on the characterstics of the goods, the goods can be divided into public goods and the private…

Q: Classical Economists say that:GDP = Consumption + Investment -and-GDP = Consumption + Savings

A: Classical economists are the people who studies economics and beleives in a specific thought of…

Q: Only one statement is 100% correct. Which one? State agencies charter and regulate national…

A: In United States, OCC, Federal Reserve, FDIC, & State Bank Regulators are the supervisors and…

Q: Consider the Aggregate expenditure model. Where: AD = C + I + G + NX where I, G, and NX are all…

A: Given information AD = C + I + G + NX where I, G, and NX are all autonomous.C = C + c∗(Y + T R − T…

Q: FIGURE 5-1 Refer to Figure 5-1. To be binding, a legal price ceiling must lie

A: price controls refer to the legal minimum price or maximum prices fixed for specified products.…

Q: The price decreases from $2,000 to $1,800. Quantity demanded per year increases from 5000 to 6000…

Q: he goal of stable prices is achieved when _______. A. the prices of food, clothing, and…

A: The main objectives of the Fed are to achieve price stability and maximum employment. Price…

Q: With respect to recent Federal Reserve policies, what has the Federal Reserve been doing? Why?

A: Introduction The Federal Reserve is the most powerful economic institution in the United States.…

Q: Machine Invention A machine is invented that makes jelly bean production more efficient. 5.…

A: The demand curve depicts the inverse relationship between price and quantity demanded, keeping…

Q: Suppose that Spain and Greece both produce wine and olive oil. The following table shows…

Q: Suppose also that we are now in the Long-Run, and that the firm has decided to still produce the…

A: In the long run there is no fixed cost. Hence the firm is able to minimize its cost by choosing that…

Q: A firm makes three products, in quantities X, Y and Z. It wishes to maximize its profit function: π=…

A: Here we are given the profit function which is equals to (Total Revenue - Total cost). As the firm…

Q: Suppose the prisoner's dilemma in question 1 is played an infinite number of times. Assume a…

A: Given Game information It is a case of prisoners dilemma is a case of self-interest and in such a…

Q: Which of the below is one of the reasons that the Aggregate Demand curve is downward sloping? The…

A: The total demand curve has been prepared under this perception that the government holds the supply…

Q: please indicate if the answers are correct in picture two.

A: The steady rise of an economy is referred to as economic growth. Looking at an economy's gross…

Q: Consider the figure at right, which describes the hypothetical demand and supply for tuna in Canada.…

A: A supply curve refers to a graphical representation of the relationship among price of an item or…

Q: Select all that apply to the classical view of economics: A. Assumes flexible price and wages B.…

A: When talking about classical economics, it can be said that it is one of the economic thoughts…

Q: Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three…

A: Solution: Willingness to pay refers to the maximum price that a customer will be willing to pay for…

Q: Topic A: Many businesses offer deals to local customers in places popular with tourists. For…

A: There are numerous justifications for why establishments in Paris give discounts to residents of the…

Q: Suppose the current price level is 149.2 and one year ago the price level 13,534.2 (both in billions…

A: The central bank determines the interest rate to control inflation in the economy. However, the long…

Q: Scooter’s Scooters is a large American manufacturer of electric scooters operating out of Grand…

A: Economies of scale is when the increase in output decreases the average total cost Diseconomies of…

Q: Becky currently earns anominal wage of $12.00 per hour; in other words, the amount of her paycheck…

A: The real wage in terms of a particular good is defined as the number of units of the good the…

Q: In each of the following cases, classify the person as cyclically unemployed, structurally…

A: Unemployment means that the individual able to do work is searching for jobs but is unable to find…

Q: . If P 5,000 shall accumulate for 10 years at 8% compounded quarterly, then what is the compound…

A: Given: Present value = 5000 Number of years = 10 The interest rate is:

Q: Bank two currently has $500 million in transaction deposits. The bank has $65 million in reserves.…

A: Required reserve are the part of deposit that are kept by the bank as per the central bank. Excess…

Q: Problem 4 - Costless Magical MacGuffin Consider a consumer that lives only for two periods. He works…

A: As per Bartleby policy, only the first three parts are answered, if you want the other parts to be…

Q: Suppose the information in the table is for a simple economy that produces and consumes only four…

Q: What are the economic concerns with NLRB and NLRA?

A: The NLRA (National Labor Relations Act, 1935 or the Wagner Act), is a famous labor law that provides…

Q: You are thinking about becoming a Paradise Coffee franchisee. Franchisees are offered a business…

A: Implicit cost are also known as opportunity costs which is the forgone income. The explicit cost is…

Q: he consultancy Imagination Inc. is working with its manufacturing client Parts-R-Us to improve their…

A: Parts-R-Us could be eligible for a $0 bonus if it achieves an on-time performance rate of 94% or…

Q: Consider a situation where two firms, 1 and 2, compete by choosing prices simultaneously. They can…

A: If firm cooperate infinitely payoff will be: 4050 + 4050 i + 4050 i2...... = 40501- i If firm choose…

Question

The price decreases from
$2,000 to $1,800. Quantity
demanded per year increases
from 5000 to 6000 units. Which
of the following is correct?
Select one:
a. The good is inferior
b.
O c.
O d.
Income elasticity is + 2
Income elasticity is + 0.5
The price elasticity of
demand is -1.72

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Why is the supply curve with constant unitary elasticity a straight line?
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.
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?
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?
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?
From the data in Table 5.5 about demand for smart phones, calculate the price elasticity of demand from: point B to point C, point D to point E, and point G to point H. Classify the elasticity at each point as elastic, inelastic, or unit elastic.
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 price elasticity of the demand for gasoline is -0.02. The price elasticity of demand for gasoline at Joe’s 66 station is -1.2. Explain what might account for the different elasticities.
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?
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?