Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
8th Edition
ISBN: 9781337607735
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 4, Problem 4QR
To determine
Classifying inferior good and normal good.
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Answer the following questions:
1.
What is a Giffen good and what is a Veblen good? What are price and income elasticity of demand of a Giffen good and a Veblen good?
Does a change in consumer taste lead to a movement along the demand curve or to a shift in demand curve? Does a change in price lead to a movement along the demand curve or to a shioft in the demand curve? Expalin your answer.
Consider some determinants of the price elasticity of demand:
• The availability of close substitutes
• Whether the good is a necessity or a luxury
• How broadly you define the market
• The time horizon being considered
A good with many close substitutes is likely to have relatively
demand, since consumers can easily choose to purchase one of the close
substitutes if the price of the good rises.
A good's price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the
same, which one has the most elastic demand?
O Sports car
O Amputation procedures for diabetes sufferers
The price elasticity of demand for a good also depends on how you define the good.
Organize the goods found in the following table by indicating which is likely to have the most elastic demand, which is likely to have the least elastic
demand, and which will have demand that falls in between.
Chapter 4 Solutions
Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
Ch. 4.1 - Prob. 1QQCh. 4.2 - Prob. 2QQCh. 4.3 - Prob. 3QQCh. 4.4 - Prob. 4QQCh. 4 - Prob. 1CQQCh. 4 - Prob. 2CQQCh. 4 - Prob. 3CQQCh. 4 - Prob. 4CQQCh. 4 - Prob. 5CQQCh. 4 - Prob. 6CQQ
Ch. 4 - Prob. 1QRCh. 4 - Prob. 2QRCh. 4 - Prob. 3QRCh. 4 - Prob. 4QRCh. 4 - Prob. 5QRCh. 4 - Prob. 6QRCh. 4 - Prob. 7QRCh. 4 - Prob. 8QRCh. 4 - Prob. 9QRCh. 4 - Prob. 1PACh. 4 - Prob. 2PACh. 4 - Consider the market for minivans. For each of the...Ch. 4 - Prob. 4PACh. 4 - Prob. 5PACh. 4 - Prob. 6PACh. 4 - Prob. 7PACh. 4 - Prob. 8PACh. 4 - Prob. 9PACh. 4 - Prob. 10PACh. 4 - Prob. 11PA
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- 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?arrow_forwardGraphically explain the effects of decrease in income to the demand for good X assumingthat good X is an inferior good.arrow_forwardAn economist notes that demand for Brand A increases when the price of Brand B decreases. We can say that Brand A and Brand B are substitute goods Brand A is an inferior good, while Brand B is a superior good Both Brand A and Brand B are normal goods O Brand A and Brand B are complementary goods O Brand A is a superior good while Brand B is an inferior goodarrow_forward
- carefully answer itarrow_forwardIf the supply curve for aspirin is perfectly elastic, then a reduction in demand will cause the equilibrium price to stay the same and the equilibrium quantity to fall. Illustrate with a graph.Briefly discuss how greater consumption of a good affect utilityarrow_forwardAll else equal, which is steeper, the demand curve for a normal good or the demand curve for an inferior good? Explainarrow_forward
- Barron used to make $2,500 a month and eat sushi three times per month. Now he is making $3,500 a month and is eating sushi seven times per month. What is Barron’s income elasticity of demand for sushi? For Barron, is sushi 1) a normal good or an inferior good, and 2) a necessity or a luxury?arrow_forwardi need help thitharrow_forwardIf macaroni and cheese is an inferior good and an increase in consumer income occurs, then which of the following statements is TRUE? Select one: O a. At a given price, more will be spent on macaroni and cheese. O b. There will be an increase in demand for macaroni and cheese. Oc The demand curve for macaroni and cheese will shift farther away from the origin. Od. There will be a decrease in demand for macaroni and cheese.arrow_forward
- If two supply curves in an economy intersect which one will have a higher price elasticity?arrow_forwardDoes a change in consumers tastes lead to a movement along the demand curve or to a shift in the demand curve? Does a change in price lead to a movement along yhe demand curve or to a shift in the demand curve?arrow_forward|Unit 3 Midterm Economics A docs.google.com/forms/d/e/1FAlpQLSfDzcagnpq9EUKBs3AWMb. a change in quantity demanded for one product or service causes a change in simple demand for a related product or service. * In 2. O Elasticity of Demand O Cross Elasticity of Demand O Diminishing Marginal Utility O Cost-Benefit Analysis O All of These O None of These The rules of the price system operate in all markets of a capitalist/market economy. The market where consumers earn income Market. by selling resources to business resources is called O Consumerarrow_forward
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