A survey taken by residents from the imaginary town of Cardsburgh tells economists that the following changes result from a 10% fall in income: • An 8% decrease in the quantity of cheques demanded • A 15% increase in the quantity of hearts demanded • A 38% decrease in the quantity of queens demanded Itranscript Compute the income elasticity of demand for each good and use the dropdown menus to complete the first column in the following table. Then, based on the income elasticities, classify each good as either a normal good or an inferior good. (Hint: Be careful to keep track of the direction of change. The sign of the income elasticity of demand can be positive or negative, and the sign gives important information.) Income Elasticity of Demand Normal Good or Inferior Good Good Cheques Hearts Queens Itranscript Hearts Which of the following three goods is most likely to be classified as a luxury good? Cheques PPP Queens 111

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7. Using the income elasticity of demand to characterize goods
A survey taken by residents from the imaginary town of Cardsburgh tells economists that the following changes result from a 10% fall in income:
• An 8% decrease in the quantity of cheques demanded
• A 15% increase in the quantity of hearts demanded
• A 38% decrease in the quantity of queens demanded
transcript
Compute the income elasticity of demand for each good and use the dropdown menus to complete the first column in the following table. Then, based
on the income elasticities, classify each good as either a normal good or an inferior good. (Hint: Be careful to keep track of the direction of change.
The sign of the income elasticity of demand can be positive or negative, and the sign gives important information.)
Income Elasticity of Demand Normal Good or Inferior Good
Good
Cheques
Hearts
Queens
Itranscript
Which of the following three goods is most likely to be classified as a luxury good ?
OOO
O Hearts
O Cheques
O Queens
Transcribed Image Text:7. Using the income elasticity of demand to characterize goods A survey taken by residents from the imaginary town of Cardsburgh tells economists that the following changes result from a 10% fall in income: • An 8% decrease in the quantity of cheques demanded • A 15% increase in the quantity of hearts demanded • A 38% decrease in the quantity of queens demanded transcript Compute the income elasticity of demand for each good and use the dropdown menus to complete the first column in the following table. Then, based on the income elasticities, classify each good as either a normal good or an inferior good. (Hint: Be careful to keep track of the direction of change. The sign of the income elasticity of demand can be positive or negative, and the sign gives important information.) Income Elasticity of Demand Normal Good or Inferior Good Good Cheques Hearts Queens Itranscript Which of the following three goods is most likely to be classified as a luxury good ? OOO O Hearts O Cheques O Queens
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