MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
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Chapter 6, Problem 17QE
To determine
The cross-
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7) If the income elasticity of demand for books is 1,5, a 10 % increase in the income of consumers will cause a __ and books are _a) 15% increase in the demand for books, normal goodsb) 15 % decrease in the demand for books, superior goodsc) 15% increase in the demand for books, inferior goodsb) 15 % decrease in the demand for books, inferior good[14:16]If the elasticity of demand for umbrellas is -1.6 and the price of umbrellas increases by 10 %, the expenditures on umbrellas willa) decrease by 6 %b) decrease b 10 %c) increase by 10 %d) increase by 6 %
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6p0:7
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(b) Find the own price elasticity of demand for bananas (¤Â‚Ãß) and interpret the value.
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Chapter 6 Solutions
MICROECONOMICS
Ch. 6.1 - If when price rises by 4 percent, quantity...Ch. 6.1 - Prob. 2QCh. 6.1 - Prob. 3QCh. 6.1 - Prob. 4QCh. 6.1 - Prob. 5QCh. 6.1 - Prob. 6QCh. 6.1 - Prob. 7QCh. 6.1 - Prob. 8QCh. 6.1 - Prob. 9QCh. 6.1 - Prob. 10Q
Ch. 6 - Determine the price elasticity of demand if, in...Ch. 6 - A firm has just increased its price by 5 percent...Ch. 6 - When tolls on the Dulles Airport Greenway were...Ch. 6 - Prob. 4QECh. 6 - Prob. 5QECh. 6 - Prob. 6QECh. 6 - Prob. 7QECh. 6 - Economists have estimated the following...Ch. 6 - Prob. 9QECh. 6 - A newspaper recently lowered its price from 5.00...Ch. 6 - Once a book has been written, would an author...Ch. 6 - Prob. 12QECh. 6 - Prob. 13QECh. 6 - Suppose average movie ticket prices are 8.50 and...Ch. 6 - Which of the following producers would you expect...Ch. 6 - Prob. 16QECh. 6 - Prob. 17QECh. 6 - Prob. 18QECh. 6 - Prob. 19QECh. 6 - Prob. 20QECh. 6 - Prob. 21QECh. 6 - Prob. 22QECh. 6 - Prob. 1QAPCh. 6 - Prob. 2QAPCh. 6 - Prob. 3QAPCh. 6 - Prob. 4QAPCh. 6 - Prob. 5QAPCh. 6 - Price elasticity is not just a technical economic...Ch. 6 - Prob. 1IPCh. 6 - Prob. 2IPCh. 6 - Prob. 3IPCh. 6 - Prob. 4IPCh. 6 - Prob. 5IPCh. 6 - In 2004, Congress allocated over 20 billion to...Ch. 6 - In 2004, (Congress allocated over 20 billion to...Ch. 6 - Prob. 8IPCh. 6 - Prob. 9IPCh. 6 - Prob. 10IP
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- Using the following equation for the demand for a good or service, calculate the price elasticity of demand (using the point form), cross-price elasticity with good x and income elasticity. Q=82P+0.10I+Px Q is quantity demanded, P is the product price. P1 is the price of a related good, and I is income. Assume that P= $10, I = 100, and Px = 20.arrow_forward(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 __________.arrow_forwardSuppose Sally buys exactly five bars of English toffee each week, regardless of whether the toffee bars are regularly priced at 1 or on sale for 0.50. Based on this information, what is Sallys price elasticity of demand for English toffee in this price range? a. 0 b. 1 c. Infinity d. Cannot be determined.arrow_forward
- Estimates presented in Exhibit 5 show that Android users have a higher price elasticity of demand for apps in the Google Play Store than do iPhone users in the Apple App Store. Why might Android users tend to be more sensitive to app prices than iPhone users? What categories or types of apps (for example, games/social media) do you think have the highest price elasticities?arrow_forwardEconomists 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_forwardWhat are the major determinants of a products price elasticity of demand? Studies indicate that the demand for Florida oranges, Bayer aspirin, watermelons, and airfares to Europe are elastic. Why?arrow_forward
- Daria's income decreases from £80,000 to £54,000 per year. As a result, she increased her demand for take-away food by 30 percent and decreased her demand for new clothes by 20 percent. a) Calculate Daria's income elasticity of demand for (i) take-away food and (ii) new clothes. b) Comment on the nature of both items. In a newspaper article you read that the price for shirts increased by 23% and the demand for pullovers rose by 9%. c) State the type of elasticity you can calculate. Calculate the elasticity and discuss the economic intuition of your result. d) The newspaper looked at historical data and noticed that the elasticity calculated in part (c) increases. What does this imply for the relationship between shirts and pullovers?arrow_forwardBlake eats two bags of generic potato chips each day, and does not purchase any name-brand chips. Blake's hourly wage increases from $7 to $15, and he decides to eat one name-brand bag and one generic-brand bag each day. Calculate Blake's income elasticity of demand for generic potato chips.arrow_forwardAssume that a retailer sells 1000 six-packs of Pepsi per day at a price of $3.25/six-pack. You as an economic analyst, estimate that the cross-price elasticity between Pepsi and Coca-Cola is 0.6. If the retailer raises the price of Coca-Cola from $3.00 to $3.30/six-pack, how would sales of Pepsi be affected, ceteris paribus? Sales of Pepsi would not be affected at all Sales of Pepsi would rise by 30 six-packs Sales of Pepsi would rise by 60 six-packs а. b. с. d. Can't tell; insufficient informationarrow_forward
- Congratulations! You have just landed your first job out of college as an economic analyst at the Bureau of Labor Statistics. Your starting salary is $55,000 per year; an increase of 250% per year over the salary you made at the local coffee shop. The corresponding table gives the percentage change in your purchases of each good after your income increases. Use this information to estimate your income elasticity of demand for each of the items. Meals at restaurants Cups of coffee Instant noodles a. Income elasticity for meals at restaurants is b. Income elasticity for cups of coffee is c. Income elasticity for instant noodles is Percentage change in quantity 500 80 -75 d. Based on the calculations of income elasticity, meals at restaurants are and ramen noodles are coffee isarrow_forward+] A survey taken by residents from the imaginary town of Draw City tells economists that the following changes result from a 17% rise in income: •A 30% increase in the quantity of clubs demanded .A 13% decrease in the quantity of hearts demanded •A 12% increase in the quantity of tokens demanded Compute the income elasticity of demand for each good and use the dropdown menus to complete the first column in the following table. Then, based on the income elasticities, classify each good as either a normal good or an inferior good. (Hint: Be careful to keep track of the direction of change. The sign of the income elasticity of demand can be positive or negative, and the sign gives important information.) Good Income Elasticity of Demand Clubs Normal Good or Inferior Good Hearts Tokens Which of the following three goods is most likely to be classified as a luxury good? Tokens O Clubs Heartsarrow_forwardSuppose a low-income family that earns K750 per month consumes 8 Kgs of Hamburgers and 2 Kgs of Beef in Month 1. However, in month 2 when the income of the family rises to K950, the quantity of Hamburgers consumed by the family reduces to 5 Kgs while the quantity of Beef increases to 4Kgs. What is the income elasticity of demand for hamburger? What is the income elasticity of demand for steak?arrow_forward
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