Question: [Mia has just found a new job with a salary that is 30% higher than her old salary.][ Will this change in income affect her consumption habits or in other words, affect the quantity demanded of different goods? Use the appropriate economic concept and explain in 100 words or less. [Suppose after increase in income, Mia ‘s visit to dentist increases by 15%, her frequency of dining out increases by 35%, her consumption of white rice falls by 25% than before. Using this information, categorise these goods (dentist visits, dining out, white rice) into ‘normal good’, ‘luxury good’ and/or ‘inferior good’. You must demonstrate all your calculations and explain logic behind your answer. There is no word limit as such but show the calculation and explain the logic in no more than 1-2 sentences.] 3. [Do you think change in Mia’s consumption behaviour in response to change in income represent the behaviour of a typical consumer. Why or why not? Present evidence to support your conclusion. Acceptable forms of evidence include books, journal articles, or news reports. Word limit is 100 words or less.

Income elasticity of demand is a measure that shows the responsiveness of the quantity demanded of a…

Answered: Question: [Mia has just found a new…

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 7SQP

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[Mia has just found a new job with a salary that is 30% higher than her old salary.]

[ Will this change in income affect her consumption habits or in other words, affect the quantity demanded of different goods? Use the appropriate economic concept and explain in 100 words or less.
[Suppose after increase in income, Mia ‘s visit to dentist increases by 15%, her frequency of dining out increases by 35%, her consumption of white rice falls by 25% than before. Using this information, categorise these goods (dentist visits, dining out, white rice) into ‘normal good’, ‘luxury good’ and/or ‘inferior good’. You must demonstrate all your calculations and explain logic behind your answer. There is no word limit as such but show the calculation and explain the logic in no more than 1-2 sentences.]

3. [Do you think change in Mia’s consumption behaviour in response to change in income represent the behaviour of a typical consumer. Why or why not? Present evidence to support your conclusion. Acceptable forms of evidence include books, journal articles, or news reports. Word limit is 100 words or less.

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