2. The following hypothetical table is John's demand for pandesal from Dec 2016 to January 2017 given his monthly income. Price per pc Quantity Income (P/mo) Dec 2016 2.00 100 5,000 Jan 2017 2.00 120 4,000 a. What happened to John's income after December? b. What happened to the quantity of pandesal bought by John? What economic concept is being shown by the relationship between John's income and his demand for pandesal? C.
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- 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?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?You have data on Meena's quantity demanded for craft beer and theirincome. According to this data when Meena's income falls by 7% theassociated change in their quantity demanded for beer is 11%. You don'tknow if it is an increase or decrease in quantity demanded. From pastresearch you know that craft beer is a normal good for Meena. Use thisinformation to calculate Meena's income elasticity of demand.
- Title Assume Brian"s income elasticity of demand for milk is 1, and he spends 1% of his income on milk. If his price elasticity of demand for milk is –0.03, what is his substitution price elasticity? Description Assume Brian"s income elasticity of demand for milk is 1, and he spends 1% of his income on milk. If his price elasticity of demand for milk is –0.03, what is his substitution price elasticity?You have data on Timon's quantity demanded for Bud Light beer and theirincome. According to this data when Timon's income rises by 6% theassociated change in their quantity demanded for Bud Light is 14%. Youdon't know if it is an increase or decrease in quantity demanded. Frompast research you know that Bud Light is an inferior good for Timon. Usethis information to calculate Timon's income elasticity of demand.An individual sets aside a certain amount of his income per month to spend on his two hobbies, collecting wine and collecting books. Given the information below, illustrate the demand curve for wine. 70- TTTTI Wine Price Book Price Wine Вooks Budget $1200 $1200 60- $15 $12 $12 $12 40 50 $30 $60 20 50 50- 10 50 $1200 40- 100- 90- 30- 80- 70- 20- 60- A 50- PCC 10- 40- 30- 0- 20- 10 20 30 40 50 10- Wine 0+ 0 10 20 30 40 50 60 70 80 90 100 Wine Using the three-point curved line drawing tool, draw the demand curve for wine in the figure to the right. Label this curve 'Demand'. Carefully follow the instructions above, and only draw the required object. Books Price
- An individual sets aside a certain amount of his income per month to spend on his two hobbies, collecting wine and collecting books. Given the information below, illustrate the demand curve for wine. Wine Price Book Price $15 $12 $30 $12 $60 $12 Books 100- 90- Wine 40 20 10 LOTB FO- Books 50 50 50 80- 70- 60- 50- 40- 30- 20- 10- 0- 0 10 20 30 40 50 60 70 80 90 100 Wine PCG Budget $1200 $1200 $1200 N Using the three-point curved line drawing tool, draw the demand curve for wine in the figure to the right. Label this curve 'Demand". Carefully follow the instructions above, and only draw the required object. CULDSuppose Mimi demands 12 pieces of sushi when she earns $3,000 a month. When she gets a raise, she now earns $4,000 a month and demands 16 pieces of sushi. What is Mimi's income elasticity of demand for sushi? 0.5 0 1 O 0.67 O 1.5Creative Homework/Short Project Assume that you arean entrepreneur who runs a bakery that sells glutenfree breads and cakes. You believe that the currenteconomic conditions merit an increase in the price ofyour baked goods. You are concerned, however, thatincreasing the price might not be profitable becauseyou are unsure of the price elasticity of demand for yourproducts. Develop a plan for the measurement of priceelasticity of demand for your products. What findingswould lead you to increase the price? What findingswould cause you to rethink the decision to increaseprices? Develop a presentation for your class outlining(1) the concept of elasticity of demand, (2) why raisingprices without understanding the elasticity would bea bad move, (3) your recommendations for measurement, and (4) the potential impact on profits for elasticand inelastic demand
- Nadia consumes two goods, food and clothing. The price of food is $2, the price of clothing is $5, andher income is $1,000. Nadia always spends 40 percent of her income on food regardless of the price offood, the price of clothing, or her income.a. What is her price elasticity of demand for food?b. What is her cross-price elasticity of demand for food with respect to the price of clothing?c. What is her income elasticity of demand for food?An individual sets aside a certain amount of his income per month to spend on his two hobbies, collecting wine and collecting books. Given the information below illustrate the demand curve for wine 50- Wine Price Book Price Wine $10 Books Budget $800 40- $8 40 50 $20 $40 $8 $8 20 50 $800 $800 10 50 30어 100- 20- 90- 80- 70- 10- 80- A PCC 50+ 40- 0- 30- 10 40 50 20 30 20- Wine 10- L 2 0+ 0 10 20 30 40 50 60 70 80 90 100 PriceCreative Homework/Short Project Assume that you arean entrepreneur who runs a bakery that sells glutenfree breads and cakes. You believe that the currenteconomic conditions merit an increase in the price ofyour baked goods. You are concerned. however, thatincreasing the price might not be profitable becauseyou are unsure of the price elasticity of demand for yourproducts. Develop a plan for the measurement of priceelasticity of demand for your products. What findingswould lead you to increase the price? What findingswould cause you to rethink the decision to increaseprices? Develop a presentation for your class outlining(I) the concept of elasticity of demand, (2) why raisingprices without undetstanding the elasticity would bea bad move. (3) your recommendations for measurement. and (4) the potential impact on profits for elasticand inelastic demand