Hi, please answer the questions 3 and 4. Thank you 10_Q2025 3. A 20 percent increase in Ramon's income brings about a 30 percent decrease in the demand for locallymade shoes. What is the income elasticity of demand? Is the good a normal good or an inferior good?Explain briefly your answer.4. Suppose a person with an income of $20,000 per year buys 10,000 oranges per year at a price of $1per orange. When the person's income rises to $25,000, he or she buys 12,000 oranges per year at thesame price per orange. What is the implied income elasticity of demand for oranges? Are oranges anormal good or an inferior good? A necessity or a luxury? Note: Use the Midpoint Elasticity Formula.

Given: Increase in income=20% Decrease in demand=30% To find: Income elasticity of demand Note: Due…

3. A 20 percent increase in Ramon's income brings about a 30 percent decrease in the demand for locally made shoes. What is the income elasticity of demand? Is the good a normal good or an inferior good? Explain briefly your answer.

3. A 20 percent increase in Ramon's income brings about a 30 percent decrease in the demand for locally made shoes. What is the income elasticity of demand? Is the good a normal good or an inferior good? Explain briefly your answer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Hi, please answer the questions 3 and 4. Thank you

3. A 20 percent increase in Ramon's income brings about a 30 percent decrease in the demand for locally
made shoes. What is the income elasticity of demand? Is the good a normal good or an inferior good?
Explain briefly your answer.
4. Suppose a person with an income of $20,000 per year buys 10,000 oranges per year at a price of $1
per orange. When the person's income rises to $25,000, he or she buys 12,000 oranges per year at the
same price per orange. What is the implied income elasticity of demand for oranges? Are oranges a
normal good or an inferior good? A necessity or a luxury? Note: Use the Midpoint Elasticity Formula.

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