MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
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Chapter 4.1, Problem 2Q
To determine
Effect of terrorist attack in the
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explain how a decrease in the real
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Chapter 4 Solutions
MICROECONOMICS
Ch. 4.1 - Prob. 1QCh. 4.1 - Prob. 2QCh. 4.1 - Prob. 3QCh. 4.1 - Prob. 4QCh. 4.1 - Prob. 5QCh. 4.1 - Prob. 6QCh. 4.1 - Prob. 7QCh. 4.1 - Prob. 8QCh. 4.1 - Prob. 9QCh. 4.1 - Prob. 10Q
Ch. 4 - Prob. 1QECh. 4 - Prob. 2QECh. 4 - Prob. 3QECh. 4 - Prob. 4QECh. 4 - Prob. 5QECh. 4 - Prob. 6QECh. 4 - Prob. 7QECh. 4 - Prob. 8QECh. 4 - Prob. 9QECh. 4 - Prob. 10QECh. 4 - Prob. 11QECh. 4 - Prob. 12QECh. 4 - Prob. 13QECh. 4 - Prob. 14QECh. 4 - Prob. 15QECh. 4 - Prob. 16QECh. 4 - Prob. 17QECh. 4 - Prob. 18QECh. 4 - Prob. 19QECh. 4 - Prob. 20QECh. 4 - Prob. 21QECh. 4 - Prob. 22QECh. 4 - Prob. 23QECh. 4 - Prob. 24QECh. 4 - Prob. 1QAPCh. 4 - Prob. 2QAPCh. 4 - Prob. 3QAPCh. 4 - Prob. 4QAPCh. 4 - Prob. 5QAPCh. 4 - Prob. 6QAPCh. 4 - Prob. 1IPCh. 4 - Prob. 2IPCh. 4 - Prob. 3IPCh. 4 - Prob. 4IPCh. 4 - Prob. 5IP
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- Julia has usual preferences over X and Y, and, at current prices and income, she spends 1/2 of her income on X. Her demands for both goods respond to changes in her income, but at current prices and income the income elasticity of her demand for Y is equal to exactly 1/3 times the value of her income elasticity of demand for X. And do you know what? If the price of Y were to go up by 1 percent, the quantity of X she demands would remain unchanged. a. If the price of X were to fall, would her demand for X increase, decrease or remain unchanged? More precisely, what is the own-price elasticity of her demand for X? b. If her income were to rise, would her demand for X rise, fall or remain unchanged? More precisely, what is the income elasticity of her demand for X?arrow_forwardImagine you are a bank manager. Currently, your bank holds $8 million in deposits at a 4% interest rate. However, you need to increase the total deposits to $10 million. The interest rate elasticity of savings is 40. What interest rate should you offer to depositors to obtain the required amount, all other things being equal?arrow_forwardWhat is the current price of gasoline and how many gallons of gasoline do you currently buy per month? How many gallons would you buy next month and how would your behavior change if the price fell by $1.25 per gallon? Also, based on that information, what is your price elasticity of demand for gasoline? Be sure to show how you calculated your price elasticity of demand. current price of gas = $2.53 gallons of gas per month = 72 gallons no change for next month On the average I fill my tank up 3 times a month each time I go I spend $60-$65arrow_forward
- HOW DO YOU RESPOND TO PRICE ELASTICITY? People have unlimited needs and wants for their personal satisfaction and because of that the prices of products easily get changed. Everyone is affected with the new normal in the market. The prices of products have become very expensive since the outbreak of the pandemic, not only in our locality, but in the whole world. If your income or the income of your family is not enough to purchase the basic commodities needed by your family, what goods would you buy, instead? What economic or marketing strategies would you apply? How would you respond to the price changes of these commodities?arrow_forwardYou have estimated that the price elasticity of demand for chai at your cafe is 0.9. If you lower the price of chai by 30% you should expect sales to rise by %. Type your numeric answer and submitarrow_forwardNadia consumes two goods, food and clothing. The price of food is $2, the price of clothing is $5, and her income is $1,000. She always spends 40% of her income on food regardless of the price of food, clothing, or her income. What is her price elasticity of demand for food? What is her cross-price elasticity of demand for food with respect to clothing? What is her income elasticity of demand for food?arrow_forward
- You were gifted a box of 50 thermos bottles that you do not need and you plan to sell them on Ebay. You were initially thinking of asking for $20 per bottle, but then you found out that demand is elastic at $20. Should you lower your asking price? Yes, because when demand is elastic, a lower price increases revenue. Yes, because when demand is inelastic, a lower price increases revenue. No, because when demand is inelastic, a lower price increases revenue. No, because when demand is elastic, a higher price increases revenue.arrow_forwardDiscuss how may the concept of elasticities affect our country’s preference for commercial spaces and malls versus public parks and playgrounds. How does this choice impact the richness of our civic lives? Answer the question using 100-150 words only.arrow_forwardIf income is doubled and all prices are doubled, then the demand for luxury goods will more than double? True or falsearrow_forward
- What would you expect to happen to spending on food at home and spending on food in restaurants during a decline in economic activity? How would income elasticity of demand help explain these changes? Justify your stance.arrow_forwardThe monthly quantity demanded for cars is shown in the table below. Demand for Cars Price (dollars) $23,098 21,000 17,808 15,000 Quantity of Cars Demanded (thousands of cars) An increase in income increases the quantity demanded by 10% at every price. Which of the following columns represents the new monthly quantity demanded for cars (in thousands of cars)? Price (dollars) 123,000 21,880 19,000 17,000 15,000 640 660 688 Column A O Column B Column C Column D 668 628 708 728 532 552 572 592 672 688 682 620 784 648 726 1668 748 680arrow_forwardSuppose the own price elasticity of demand for good X is −4, its income elasticity is 3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is 4. Determine how much the consumption of this good will change if:Instructions: Enter your responses as percentages. If you are entering a negative number, be sure to use a (−) sign.a. The price of good X decreases by 4 percent. percentb. The price of good Y increases by 9 percent. percentc. Advertising decreases by 2 percent. percentd. Income increases by 3 percent. percentarrow_forward
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