4. Assume a piece of jewelry and 2 consecutive drops in its price. Also consider Alia's demand to be relative elastic in the price range from P, to P2, and that she perceives jewelry as a Giffen good in the price range from P2 to P3. Draw her price-consumption curve with well-behaved preferences. Clearly label your graph.

4. Assume a piece of jewelry and 2 consecutive drops in its price. Also consider Alia's demand to be relative elastic in the price range from P, to P2, and that she perceives jewelry as a Giffen good in the price range from P2 to P3. Draw her price-consumption curve with well-behaved preferences. Clearly label your graph.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

24
Attina's sister, Aquata always spends 20% of her income on boots. Assume that her income increases by some percentage while the price of boots remains constant (and that all boots cost the same). What is her income elasticity of demand for boots? O 0.2 need more information to tell 0 1
1. Suppose that a representative individual has the following utility function U(x,y) = xªyß The price of good x is Php 40 and the price of good y is Php 20. The individual's income is Php 160. a. Calculate the uncompensated own-price elasticity of demand for good x and identify if it is price elastic, inelastic, or unit elastic. b. Calculate the uncompensated cross-price elasticity of demand for good x with respect to the price of good y and interpret your results.
Assume a piece of jewelry and 2 consecutive drops in its price. Also consider Sara’s demand to be relative elastic in the price range from ?1 to ?2, and that she perceives jewelry as a Giffen good in the price range from ?2 to ?3. Draw her price-consumption curve with well-behaved preferences. Clearly label your graph.
What 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-$65
Name a good you consume for which your incomeelasticity of demand is positive. What happenswhen your income increases?
3. If all other factors remain the same, what happens to the demand curve for coffee if there is: (a) an increase in the price of tea, (b) a decrease in family income, (c) an increase in the price of coffee? In answering these questions draw and carefully label a set of axes. On the horizontal axis of your graph, show the quantity of coffee. On the vertical axis show the price per cup of coffee. Since you do not have specific data on prices and quantities demanded, just indicate prices with a P and Quantity with a Q. Focus on the general shape and position of the curves before and after events occur. Draw new curves to show what happens in each of the circumstances given, if necessary. 3. If all other factors are unchanged, what happens to the supply curve for coffee if there is: (a) an increase in wages paid to coffee store clerks, (b) an increase in the price of coffee, or (c) an increase in the number of coffee stores? In answering these questions draw graphs, as necessary, using…
1. Suppose that a representative individual has the following utility function U(x, y) = xªyß The price of good x is Php 40 and the price of good y is Php 20. The individual's income is Php 160. a. Calculate the income elasticity of demand for good x. Is good x a normal or an inferior good? b. Calculate the compensated cross-price elasticity of demand for good x with respect to the price of good y and interpret your result.
7. Using the income elasticity of demand to characterize goods A survey taken by residents from the imaginary town of Draw City tells economists that the following changes result from a 10% rise in income: • A 2% increase in the quantity of tokens demanded • A 17% decrease in the quantity of kings demanded • A 34% increase in the quantity of queens 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.) Income Elasticity of Demand Normal Good or Inferior Good Good Tokens Kings Queens Which of the following three goods is most likely to be classified as a luxury good ? O Kings Tokens Queens
Draw the following scenario: Assume a piece of jewelry and 2 consecutive drops in its price. Also consider Alia’s demand to be relative elastic in the price range from ? 1to ? 2, and that she perceives jewelry as a Giffen good in the price range from ? 2to ? 4. Draw her price-consumption curve with well-behaved preferences. Clearly label your graph. The graph may be something like this:
2/ Assume a piece of jewelry and 2 consecutive drops in its price. Also consider Alia’s demand to be relative elastic in the price range from p1 to p2, and that she perceives jewelry as a Giffen good in the price range from p2 to p3. Draw her price-consumption curve with well-behaved preferences. Clearly label your graph.
Suppose that the average consumer income changes from PHP 20,000 to 24,000. Using the POINT FORMULA, how much is the income elasticity when the quantity purchased by the consumers changes from 78 to 94? Are bananas a necessity? Or luxury? Or inferior good?