Jane, who works for the economic research department in a multinational corporation, is preparing a report for the advisory board of the company. The report intends to clarify in which country they should invest given the expected change in demand. The objective is, of course, to identify the country with greater change in demand. Jane analyzes countries A and B that currently have the same demand. She calculates the partial derivatives of demand with respect to income and finds that for country A it is greater than for country B. Demand in country A is measured in pounds and in country B in Kg. Can we conclude that if the only change expected in both countries is a change in income of 3.5%, then the company should invest in country A? no, we should calculate instead the income elasticity for the consumption of the good the company sells in each country. There is no statistic that can illuminate the advisory board on this problem. yes, because the derivative tells us that for each unit of increase in income for country A, the demand will increase more than in country B. no, we should calculate instead the marginal utility for the consumption in each country. no, we should calculate instead the marginal rate of substitution for each country.
Jane, who works for the economic research department in a multinational corporation, is preparing a report for the advisory board of the company. The report intends to clarify in which country they should invest given the expected change in demand. The objective is, of course, to identify the country with greater change in demand. Jane analyzes countries A and B that currently have the same demand. She calculates the partial derivatives of demand with respect to income and finds that for country A it is greater than for country B. Demand in country A is measured in pounds and in country B in Kg. Can we conclude that if the only change expected in both countries is a change in income of 3.5%, then the company should invest in country A?
no, we should calculate instead the income elasticity for the consumption of the good the company sells in each country.
There is no statistic that can illuminate the advisory board on this problem.
yes, because the derivative tells us that for each unit of increase in income for country A, the demand will increase more than in country B.
no, we should calculate instead the
no, we should calculate instead the marginal rate of substitution for each country.
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