A typical consumer spends 40% of income on housing and housing is a necessity for consumers. Which of the following values is reasonable for the income elasticity of all other goods, ξo? A. 0.5 B. 0.8 C. 1.2 D. 1.8 (please tell me all the concept and how you do it)
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A typical consumer spends 40% of income on housing and housing is a necessity for consumers. Which of the following values is reasonable for the income elasticity of all other goods, ξo?
A. 0.5 B. 0.8 C. 1.2 D. 1.8
(please tell me all the concept and how you do it)
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- Which of the following is true concerning the income effect of a decrease in price? A. It will lead to an increase in consumption only for an inferior good. В. It will lead to an increase in consumption only for a Giffen good. C. It always will lead to an increase in consumption. It will lead to an increase in consumption only for a normal good. B. D.2. The accompanying table lists the cross - price elasticities of demand for several goods, where the percent quantity change is measured for the first good of the pair, and the percent price change is measured for the second good. a. Explain the sign of each of the cross - price elasticities. What does it imply about the relationship between the two goods in question? b. Compare the absolute values of the cross - price elasticities and explain their magnitudes. For example, why is the cross - price elasticity of McDonald's burgers and Burger King burgers less than the cross - price elasticity of butter and margarine? Use the information in the table to calculate how a 5% increase in the price of Pepsi affects the quantity of Coke demanded. d. Use the information in the table to calculate how a 10% decrease in the price of gasoline affects the quantity of SUVS demanded. Cross-price Good elasticities of demand Air - conditioning units and kilowatts of electricity Coke and Pepsi High -…Why is a more narrowly defined goods (pizza) likely to have a greater elasticity demand than a more broadly defined goods (food)?
- 7. Using the income elasticity of demand to characterize goods A survey taken by residents from the imaginary town of Draw City tells economists that the following changes result from an 11% fall in income: • A 13% increase in the quantity of kings demanded • A 14% decrease in the quantity of tokens demanded • A 30% decrease in the quantity of clubs demanded 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.) Good Kings Tokens Clubs Income Elasticity of Demand Normal Good or Inferior Good Which of the following three goods is most likely to be classified as a luxury good? Clubs Kings TokensIndicate whether the statement is True or False, and briefly explain why: A. Marginal benefit equal to marginal cost is the point where consumers are maximizing their satisfaction within their budget. B. The marginal benefit is equal to the marginal utility you obtain from consuming one extra unit of the good. C. What matters for consumers when they want to decide to buy one more unit of a good is how much utility they got from all the units they consumed before. D. Elasticity can be related to the measure of a percentage change in quantity demanded divided by the percentage change in the price of a good.Consider some determinants of the price elasticity of demand: • The availability of close substitutes • The proportion of a consumer's budget spent on the good • The time horizon being considered A good with many close substitutes is likely to have relatively demand, because consumers can easily choose to purchase one of the close substitutes if the price of the good rises. elastic A good's price elasticity of demand depends in part on how ne inelastic s relative to other goods. If the following goods are priced approximately the same, which one has the least elastic demand? O Yacht O A heart valve for heart attack victims Price elasticity for a good depends on the share of a consumer's budget spent on a good. Other things being equal, which of the following goods has the most elastic demand? O Salt O Computer O Laundry detergent
- 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…Calculate your price elasticity of demand as the price of motor vehiclesincreases from $920 to $1300 when income is $15,000. Is the good elasticor inelastic? ii. Calculate your income elasticity of demand as your income increasesfrom $15,000 to $24,000 if the price moves from $640 to $1,120. What doesthe value tell you about the good?7. Using the income elasticity of demand to characterize goods A survey taken by residents from the imaginary town of Draw City tells economists that the following changes result from a 10% rise in income: • A 2% increase in the quantity of tokens demanded • A 17% decrease in the quantity of kings demanded • A 34% increase in the quantity of queens demanded 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 Tokens Kings Queens Which of the following three goods is most likely to be classified as a luxury good ? O Kings Tokens Queens
- 1. The price of a good rises from $6 to $8. Thus, the quantity demanded of that good falls from 150 to 75 units. Using the point-slope formula, calculate the Price Elasticity of Demand. Note: You’ll use this answer to help you with Question 2 & 3 (coming up next). A. -1.50 B. -0.66 C. -2 D. -0.04 E. -25 F. -1 2. Given your response in Question 1, classify the coefficient of the Price Elasticity of Demand. A. Elastic B. Inelastic C. Perfectly Elastic D. Perfectly Inelastic E. Unit Elastic 3. Which of the following statements is the best interpretation of the coefficient of the Price Elasticity of Demand in Question 1? A. There will be a 0.66 percent decrease in the Quantity Demanded. B. A 1 percent increase in the Price of a good corresponds to a 0.66 percent decrease in the Quantity Demanded for that good. C. A 1 percent increase in the Price of a good corresponds to a 1.55 percent increase in the Quantity Demanded for that good. D. Given the Price…6. John consumes strawberries and cream together and in the fixed ratio of two boxes of strawberries to one cartons of cream. At any other ratio, the excess goods are totally useless to him. The cost of a box of strawberries is $10 and the cost of a carton of cream is $10. At an income of $300, what is John's demand on cream and strawberry?
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