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 herconsumption of food? Because a large price change is involved, use the arc elasticity to measure the priceelasticity 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 toease the effect of the sales tax. What would her consumption of food be now? (Again, use an arc incomeelasticity to answer this question instead of a point income elasticity.) Felicia's consumption of food wouldnow be 4,175.18 units. (Enter your response rounded to two decimal places.) Is she better or worse offwhen given a rebate equal to the sales tax payments? Accurately draw the graph and explain. 1.) Using theline 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 $2.50and her income is $27,500. Label your line' L. Carefully follow the instructions above, and only drawthe 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 thather income is $25.005.If the food and the price of bed to in $2.50, who would teppen to hepensumption of food? Because a large price change is involved, use the art ekscity to measurethe price alasticity of demand rather than a paint clasticityFeisia's consumption of food would decrease by 1000.00 unts (Enter your resanso rounded totwo decimal places)Suppose that Falcia gets a sex rebate of $2,500 to case the effect of the sales tax. What wouldfer carumption af food ben? (Aysin san si hily to this quandatead of a pont meamo costyFelicia's consumption of food would now be 4,175.10 units. (Enter your response rounded to twoIs she better or warse off when given a rebate equal to the sales tax payments? Accurately crowThe graph and p1) Ghing in low imming toot graph Felice dge fine when the prices of food is $250 and herroome 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 herIncome is $27,500. Label your line ₂Garatay aw thitructions sims, sal only the qualseOther Consumption14301202010:0a00:0ANla2000 40000 4000 1000 1000 14000FoodGOO

Arc Elasticity of Demand refers to the measure of change of the quantity demanded to measure of…

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 AN Food GPO

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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