When income rises by 3 percent and other things remain the same, the quantity demanded of good C decreases by 6 percent. Calculate the income elasticity of demand for good C. Is good C a normal good or an inferior good? How does the demand for good C change? The income elasticity of demand for good C is -2 >>> Answer to 1 decimal place. Good Cis GOLD good and as income rises, the demand for good C OA. a complementary; increases B. an inferior, decreases C. a normal; increases D. an inferior, increases E. a normal; decreases

When income rises by 3 percent and other things remain the same, the quantity demanded of good C decreases by 6 percent. Calculate the income elasticity of demand for good C. Is good C a normal good or an inferior good? How does the demand for good C change? The income elasticity of demand for good C is -2 >>> Answer to 1 decimal place. Good Cis GOLD good and as income rises, the demand for good C OA. a complementary; increases B. an inferior, decreases C. a normal; increases D. an inferior, increases E. a normal; decreases

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 31CTQ: Economists define normal goods as having a positive income elasticity. We can divide normal goods...

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Income 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?
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?
Would you expect supply to play a more significant role in determining the price of a basic necessity like food or a luxury like perfume? Explain. Hint: Think about how the price elasticity of demand will differ between necessities and luxuries.
The avenge annual income rises from 25,000 to 33,000, and the quantity of bleed consumed in a year by the avenge person falls from 30 loaves to 22 loaves. What is the income elasticity of bread consumption? Is bread a normal or an inferior good?
(Other Elasticity Measures) Complete each of the following sentences: a. The income elasticity of demand measures, for a given price, the __________ in quantity demanded divided by the __________ income from which it resulted. b. If a decrease in the price of one good causes a decrease in demand for another good, the two goods are __________. c. If the value of the cross-price elasticity of demand between two goods is approximately zero, they are considered __________.
Suppose the cross-price elasticity of apples with respect to the price of oranges is 0.4, and the price of oranges falls by 3. What will happen to the demand for apples?
The equation for a demand curve is P=483Q. What is the elasticity in moving from quantity of 5 to a quantity of 6?
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?
What is the relationship between price elasticity and position on the demand curve? For example, as you move up the demand curve to higher prices and lower quantities, what happens lo the measured elasticity? How would you explain that?
If supply is elastic, will shifts in demand have a larger effect on equilibrium quantity or on price?
What is the formula for the income elasticity of demand?
What is the price elasticity of demand? Can you explain it in your own words?