a)The hobbit family buys 72 vegetarian specials annually at a price of $3.00 each but would consume 192 per year if the price dropped to $2.40. Calculate their price elasticity of demand. b) if a strong recovery raises national income from $4.0 trillion to 4.4 trillion and diamond sales jump from 3 million to 13 million carats annually, calculate the income elasticity for diamonds. c) if each 1 percent increase in the price of pencils cause a 2 percent decline in the quantity of erasers sold, the cross-price elasticity of demand for these goods is about ----- and the goods are -------
a)The hobbit family buys 72 vegetarian specials annually at a price of $3.00 each but would consume 192 per year if the price dropped to $2.40. Calculate their price elasticity of demand. b) if a strong recovery raises national income from $4.0 trillion to 4.4 trillion and diamond sales jump from 3 million to 13 million carats annually, calculate the income elasticity for diamonds. c) if each 1 percent increase in the price of pencils cause a 2 percent decline in the quantity of erasers sold, the cross-price elasticity of demand for these goods is about ----- and the goods are -------
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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a)The hobbit family buys 72 vegetarian specials annually at a
b) if a strong recovery raises national income from $4.0 trillion to 4.4 trillion and diamond sales jump from 3 million to 13 million carats annually, calculate the income elasticity for diamonds.
c) if each 1 percent increase in the price of pencils cause a 2 percent decline in the quantity of erasers sold, the cross-price elasticity of demand for these goods is about ----- and the goods are -------.
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