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 queens demanded • A 13% decrease in the quantity of kings demanded • A 12% increase in the quantity of cheques 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 Normal Good or Inferior Good Queens Kings Cheques Which of the following three goods is most likely to be classified as a luxury good ? Kings Queens Cheques
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 queens demanded • A 13% decrease in the quantity of kings demanded • A 12% increase in the quantity of cheques 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 Normal Good or Inferior Good Queens Kings Cheques Which of the following three goods is most likely to be classified as a luxury good ? Kings Queens Cheques
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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 queens demanded |
| • | A 13% decrease in the quantity of kings demanded |
| • | A 12% increase in the quantity of cheques 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
|
Normal Good or Inferior Good
|
|---|---|---|
| Queens | ||
| Kings | ||
| Cheques |
Which of the following three goods is most likely to be classified as a luxury good ?
Kings
Queens
Cheques
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