Use the figure to calculate the Income Elasticity of Demand when income increases from $25,000 to $30,000 (Show your calculations) 30 D' (M - $30,000) D (M - $25,000)
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![Use the figure to calculate the Income
Elasticity of Demand when income increases
from $25,000 to $30,000 (Show your
calculations)
Px
B
30
D' (M - $30,000)
D (M - $25,000)
900
1,100
Quantity of good X
Price (5)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff1d390b7-d22e-4e24-94c4-fd747ca1a914%2F3f6fe3a1-65c5-470d-8ab0-5441e356c08e%2Fyd3452_processed.jpeg&w=3840&q=75)
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- Calculaye cross elasticity of demand exy Before Commodity. Price. Quantity (cent/cup) (units/month) Lemon (Y) 40. 50 Yea (X) 20. 40. After Price. Quantity (Cent/units) (unirs/months) 60. 30 20. 50Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the goods you buy has a negative income elasticity, that is, it is an inferior good, what must be true of the income elasticity of the other good you buy?What is the formula for calculating elasticity?
- ADDED DISCUSSION WITH QUESTIONS TOPIC: MARGINAL UTILITY 5 6 7 No. of Pieces Total Utility (Q) 1 2 3 4 (TU) 150 225 250 220 8 9 10 11 Marginal Utility is calculated using the formula given below 12 Marginal Utility (TU-TU)/(Q-Q) 13 14 D For 1 Piece For 2 Piece For 3d Piece (86-0)/(A6-0) -(87-86)/(A7-A6) 150 75 (88-87)/(AS-A7) 25 Marginal 15 Utility Formula 16 Marginal Utility 17 For 1st Piece of the Cake Marginal Utility1 = (150-0)/(1-0) Marginal Utility1 = 150 For 4th Piece (89-88)/(AS-AS) -30 For 2nd Piece of the Cake Marginal Utility2=(225-150)/(2-1) Marginal Utility2 = 75 For 3rd Piece of the Cake Marginal Utility3 = (250-225)/(3-2) Marginal Utility3 = 25 For 4th Piece of the Cake Marginal Utility4 = (220-250) / (4-3) Marginal Utility4 = -30 Therefore, here we can see how the marginal utility of a piece of cake declines after the consumption of the previous one. Here, the highest utility is reached at the consumption of the 3rd piece, beyond whichthe total declined. This is a…Only typed answerA consumer's weekly income is $300, and the consumer buys 5 bars of chocolate per week. When weekly income increases to $330, the consumer buys 6 bars per week. The income elasticity of demand for chocolate 17 by this consumer is about Multiple Choice еВook 0. 0.52 1.91. Mc Graw Hill P Type here to search 10:31 AM 84°F Sunny 10/2/2021 2.
- Q5PROBLEM (2) A consumer has utility u(x,y) X y This time, I give you the marginal utilities (don't expect it in the midterm!) MUx = over bundles of food (x) and clothing (y). 1 and MUY x² (a) Does the consumer always prefer more food to less? (b) Does she exhibit diminishing marginal utility for food? (c) Does she exhibit diminishing MRS? (d) If she is indifferent between the bundles A = ( = = The more food she has, does she value food less relative to clothing? (That is, she is willing to give up fewer units of clothing for an additional unit of food) Circle: YES / NO Are her indifference curves bowed towards the origin? Circle: YES / NO ¹) and B = (¹,x), calculate x. , 3 4 1 y² (e) Does she value food -relative to clothing- the same at bundle A and B ? If not, at which bundle does she value food (relative to clothing) more? (f) Why should we not be worried about the fact that the utility function here always takes "negative values"? (g) (wait for the next class for us to cover utility…the pilge elasticity of cemand for a product is05. then a price cut fromn $3.00 to $2.70 wll Multiple Choice leBook, increase the quantity demanded by about 50 percent. decrease the quantity demanded by about 5 percent. 33好好好洛影 B888868 increase the quantity demanded by about 5 percent. increase the quantity demanded by about 20 percent. 15
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