The income effect of a price change predicts that a to a(n) in the consumption of rise; decrease; increase; inferior rise; decrease; decrease; inferior fall; decrease; decrease; normal fall; increase; increase; inferior goods. in a good's price will consumer purchasing power, leading

Economists define normal goods as having a positive income elasticity. We can divide normal goods into two types: Those whose income elasticity is less than one and those whose income elasticity is greater than one. Think about products that would fall into each category. Can you come up with a name for each category?

If a 10 decrease in the price of one product that you buy causes an 8 increase in quantity demanded of that product, will another 10 decrease in the price cause another 3 increase (no more and no less) in quantity demanded?

Suppose that your demand schedule for pizza is asfollows:PriceQuantity Demanded(income 5 $20,000)Quantity Demanded(income 5 $24,000)$8 40 pizzas 50 pizzas10 32 4512 24 3014 16 2016 8 12a. Use the midpoint method to calculate your priceelasticity of demand as the price of pizza increasesfrom $8 to $10 if (i) your income is $20,000 and(ii) your income is $24,000.b. Calculate your income elasticity of demand asyour income increases from $20,000 to $24,000 if(i) the price is $12 and (ii) the price is $16.