Sharon spends all of her income on peaches and strawberries. Peaches are a normal good for her. Her income increased by 20 percent and prices did not change. Her consumption of strawberries could not have increased by more than 20 percent.
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Sharon spends all of her income on peaches and strawberries. Peaches are a normal good for her. Her income increased by 20 percent and prices did not change. Her consumption of strawberries could not have increased by more than 20 percent.
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- You have just opened a new grocery store. Every item you carry is generic (generic beer, generic bread, generic chicken, etc.). You recently read an article in the Wall Street Journal reporting that the price of recreation is expected to increase by 15 percent. How will this affect your store’s sales of generic food products?What happens to consumption of a normal good when its price increases?Marie has a weekly budget of $24. Pie's are $12. Magazine's are $4. What is the maximum number of pies Marie can buy in a week? What is the maximum number of magazines Marie can buy in a week?
- If a consumer's income decreases, what will happen to the budget line? It will shift outward. It will become steeper. It will become flatter. It will shift inward.how do I illustrate an increase in a price of an item resulting in consumers buying another itemDoes the income level of a person change their view of substitute goods?
- How does a consumer’s optimal choice of goods change if all prices and the consumer’s income double?If cereal is normal good, this will cause the demand for cereal to increase or decrease.Akram spends all of his income on food and clothing. When the price of clothing decreases, he buys more clothing.Does the income effect cause her to buy more or less clothing? Explain.
- Wendy drinks 10 sugary drinks and 4 smoothies a week. Smoothies are $5 each and sugary drinks were $2 each. This week, things are different: the government has slapped a tax on sugary drinks and their price has doubled to $4. But it's not all bad news for Wendy. The government has also revised the income tax, so Wendy's drinks budget has increased. She can now just afford to buy her usual 10 sugary drinks and 4 smoothies a week.In 2001, the typical consumer in Volcania spent $3577 on all goods and services. They spent $1967.35 on food. What percent of their budget did they spend on food?Give examples of goods with high utility and high prices, andgoods with low utility and low prices.