Suppose average real incomes go up by 10% in one year. During that year suppose that: purchases at dollar stores decline by 2%, purchases of dishwashing liquid soap increase by 2%, and purchases of new automobiles increase by 12%. Using the terminology of income elasticity of demand, discuss which of these is likely an inferior good, normal good, or even closer to a luxury good.
Suppose average real incomes go up by 10% in one year. During that year suppose that: purchases at dollar stores decline by 2%, purchases of dishwashing liquid soap increase by 2%, and purchases of new automobiles increase by 12%. Using the terminology of income elasticity of demand, discuss which of these is likely an inferior good, normal good, or even closer to a luxury good.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter5: Price Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 17SQ: Suppose Sally buys exactly five bars of English toffee each week, regardless of whether the toffee...
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- Suppose average real incomes go up by 10% in one year. During that year suppose that: purchases at dollar stores decline by 2%, purchases of dishwashing liquid soap increase by 2%, and purchases of new automobiles increase by 12%. Using the terminology of income
elasticity of demand , discuss which of these is likely an inferior good, normal good, or even closer to a luxury good.
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