When Marvan received a promotion at work, his income rose by 20%, and he decided to increase his visits to the movies. If his income elasticity of demand for movies is 0.6, he will watch: O a. 20% more movies O b. 12% more movies O c. 6% more movies Od. 6% more movies and 14% more of other goods The price of Good A increases by 70%, causing the quantity consumed of Good B to increase by 50%. If everything else is held constant, we can say that Good A and Good B are: O a. substitutes O b. inferior O c. complements d. normal

When Marvan received a promotion at work, his income rose by 20%, and he decided to increase his visits to the movies. If his income elasticity of demand for movies is 0.6, he will watch: O a. 20% more movies O b. 12% more movies O c. 6% more movies Od. 6% more movies and 14% more of other goods The price of Good A increases by 70%, causing the quantity consumed of Good B to increase by 50%. If everything else is held constant, we can say that Good A and Good B are: O a. substitutes O b. inferior O c. complements d. normal

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 7PA: Maria has decided always to spend one third of her income on clothing. a. What is her income...

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?
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.
Maria has decided always to spend one third of her income on clothing. a. What is her income elasticity of clothing demand? b. What is her price elasticity of clothing demand? c. It Marias tastes change and she decides to spend only one fourth of her income on clothing, how does her demand curve change? What is her income elasticity and price elasticity now?
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=483Q. What is the elasticity in moving from quantity of 5 to a quantity of 6?
(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 __________.
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?
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.
Isabella always spends $50 on red roses each month and simply adjusts the quantity she purchases as the price changes. What can you say about Isabella's elasticity of demand for roses?
What is the formula for the income elasticity of demand?
Why is the supply curve with constant unitary elasticity a straight line?