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Suppni stasticity of demand for foad is 8.45 and the price staticity of demandin -1.00. Suppose ako tal en eends $10,000 a year on ood, the price of food $2 and that hor income is $25.003. Infoadcom the price of kood in $2.50, who word topparbe consumption of food? Decause a large price change is volved, use the aselsaly to measure the price aiasticity of demend rather than a paint clasticity, Felsia's consumption of food would decrease by 1000.00 units Enter your recent two decimi places) Suppose that Falls gets a sex robate of $2,500 to case the effect of the sales tax What would he caption af food iw (Aysin man y quan stood of apot Moomo cat Felca's consumption of food would now be 4.15 16 units. Enter your ow m) Is she botter erware off when given a rebate equal to the sales tax payments? Accurately craw god 11 Lingowing to graphics.dgw liw the price of food is $250 income is $25,000. Latelyourine L₂'. 2.1 Using Mo Ane arawing toet graph her budget Inc when the price of food is $2.59 and hor inomais 927,500. Label your line Ly Garatay aw the trucis siten, wat way than the squal URUTIN0.10 14P 102:0 *A*N Food GPO

Suppni stasticity of demand for foad is 8.45 and the price staticity of demandin -1.00. Suppose ako tal en eends $10,000 a year on ood, the price of food $2 and that hor income is $25.003. Infoadcom the price of kood in $2.50, who word topparbe consumption of food? Decause a large price change is volved, use the aselsaly to measure the price aiasticity of demend rather than a paint clasticity, Felsia's consumption of food would decrease by 1000.00 units Enter your recent two decimi places) Suppose that Falls gets a sex robate of $2,500 to case the effect of the sales tax What would he caption af food iw (Aysin man y quan stood of apot Moomo cat Felca's consumption of food would now be 4.15 16 units. Enter your ow m) Is she botter erware off when given a rebate equal to the sales tax payments? Accurately craw god 11 Lingowing to graphics.dgw liw the price of food is $250 income is $25,000. Latelyourine L₂'. 2.1 Using Mo Ane arawing toet graph her budget Inc when the price of food is $2.59 and hor inomais 927,500. Label your line Ly Garatay aw the trucis siten, wat way than the squal URUTIN0.10 14P 102:0 *A*N Food GPO

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose the income elasticity of demand for food is 0.45 and the price elasticity of demand is 1.00. Suppose also that Felicia spends $10,000 a year on food, the price of food is $2, and that her income is $ 25,000. If a sales tax on food caused the price of food to increase to $2.50, what would happen to her consumption of food? Because a large price change is involved, use the arc elasticity to measure the price elasticity of demand rather than a point elasticity. Felicia's consumption of food would decrease by units. ( Enter your response rounded to two decimal places.) Suppose that Felicia gets a tax rebate of $2,500 to ease the effect of the sales tax. What would her consumption of food be now? (Again, use an arc income elasticity to answer this question instead of a point income elasticity.) Felicia's consumption of food would now be 4,175.18 units. (Enter your response rounded to two decimal places.) Is she better or worse off when given a rebate equal to the sales tax payments? Accurately draw the graph and explain. 1.) Using the line drawing tool, graph Felicia's budget line when the price of food is $2.50 and her income is $25,000. Label your line' L₂. 2.) Using the line drawing tool, graph her budget line when the price of food is $2.50 and her income is $27,500. Label your line' L. Carefully follow the instructions above, and only draw the required objects. Suppose the incoma slasticity of demand for food is 0.45 and the price staticity of demandia -1.00. Suppose also that Felicis spends $10,000 a year on food, the price of food is $2 and that her income is $25.005. If the food and the price of bed to in $2.50, who would teppen to he pensumption of food? Because a large price change is involved, use the art ekscity to measure the price alasticity of demand rather than a paint clasticity Feisia's consumption of food would decrease by 1000.00 unts (Enter your resanso rounded to two decimal places) Suppose that Falcia gets a sex rebate of $2,500 to case the effect of the sales tax. What would fer carumption af food ben? (Aysin san si hily to this quand atead of a pont meamo costy Felicia's consumption of food would now be 4,175.10 units. (Enter your response rounded to two Is she better or warse off when given a rebate equal to the sales tax payments? Accurately crow The graph and p 1) Ghing in low imming toot graph Felice dge fine when the prices of food is $250 and her roome is $25,000. Label your line L₂. 2.1 using mo e araming toet graphrer budget Ine when the price of food is $2.50 and her Income is $27,500. Label your line ₂ Garatay aw thitructions sims, sal only the qualse Other Consumption 1430 12020 10:0 a 00:0 AN la 2000 40000 4000 1000 1000 14000 Food GOO
Transcribed Image Text:Suppose the income elasticity of demand for food is 0.45 and the price elasticity of demand is 1.00. Suppose also that Felicia spends $10,000 a year on food, the price of food is $2, and that her income is $ 25,000. If a sales tax on food caused the price of food to increase to $2.50, what would happen to her consumption of food? Because a large price change is involved, use the arc elasticity to measure the price elasticity of demand rather than a point elasticity. Felicia's consumption of food would decrease by units. ( Enter your response rounded to two decimal places.) Suppose that Felicia gets a tax rebate of $2,500 to ease the effect of the sales tax. What would her consumption of food be now? (Again, use an arc income elasticity to answer this question instead of a point income elasticity.) Felicia's consumption of food would now be 4,175.18 units. (Enter your response rounded to two decimal places.) Is she better or worse off when given a rebate equal to the sales tax payments? Accurately draw the graph and explain. 1.) Using the line drawing tool, graph Felicia's budget line when the price of food is $2.50 and her income is $25,000. Label your line' L₂. 2.) Using the line drawing tool, graph her budget line when the price of food is $2.50 and her income is $27,500. Label your line' L. Carefully follow the instructions above, and only draw the required objects. Suppose the incoma slasticity of demand for food is 0.45 and the price staticity of demandia -1.00. Suppose also that Felicis spends $10,000 a year on food, the price of food is $2 and that her income is $25.005. If the food and the price of bed to in $2.50, who would teppen to he pensumption of food? Because a large price change is involved, use the art ekscity to measure the price alasticity of demand rather than a paint clasticity Feisia's consumption of food would decrease by 1000.00 unts (Enter your resanso rounded to two decimal places) Suppose that Falcia gets a sex rebate of $2,500 to case the effect of the sales tax. What would fer carumption af food ben? (Aysin san si hily to this quand atead of a pont meamo costy Felicia's consumption of food would now be 4,175.10 units. (Enter your response rounded to two Is she better or warse off when given a rebate equal to the sales tax payments? Accurately crow The graph and p 1) Ghing in low imming toot graph Felice dge fine when the prices of food is $250 and her roome is $25,000. Label your line L₂. 2.1 using mo e araming toet graphrer budget Ine when the price of food is $2.50 and her Income is $27,500. Label your line ₂ Garatay aw thitructions sims, sal only the qualse Other Consumption 1430 12020 10:0 a 00:0 AN la 2000 40000 4000 1000 1000 14000 Food GOO
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