Microeconomics (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134184241
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Question
Chapter 4, Problem 11E
(a)
To determine
To calculate the change in consumption of food.
(b)
To determine
To calculate the change in the consumption of food.
(c)
To determine
To graphically represent the welfare of the consumer.
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Students have asked these similar questions
Suppose the income elasticity of demand for food is 0.45 and the price elasticity of demand is 1.00.
Suppose also that Felicia spends $10,000 a year on food, the price of food is $2, and that her income is $
25,000. If a sales tax on food caused the price of food to increase to $2.50, what would happen to her
consumption of food? Because a large price change is involved, use the arc elasticity to measure the price
elasticity of demand rather than a point elasticity. Felicia's consumption of food would decrease by units. (
Enter your response rounded to two decimal places.) Suppose that Felicia gets a tax rebate of $2,500 to
ease the effect of the sales tax. What would her consumption of food be now? (Again, use an arc income
elasticity to answer this question instead of a point income elasticity.) Felicia's consumption of food would
now be 4,175.18 units. (Enter your response rounded to two decimal places.) Is she better or worse off
when given a rebate equal to the sales tax payments?…
Suppose the income elasticity of demand for food is 0.45 and the price elasticity of demand is
- 1.00. Suppose also that Felicia spends $10,000 a year on food, the price of food is $2, and that
her income is $25,000.
If a sales tax on food caused the price of food to increase to $2.50, what would happen to her
consumption of food? Because a large price change is involved, use the arc elasticity to measure
the price elasticity of demand rather than a point elasticity.
Felicia's consumption of food would decrease by 1000.00 units. (Enter your response rounded to
two decimal places.)
Suppose that Felicia gets a tax rebate of $2,500 to ease the effect of the sales tax. What would
her consumption of food be now? (Again, use an arc income elasticity to answer this question
instead of a point income elasticity.)
Felicia's consumption of food would now be 4,175.18 units. (Enter your response rounded to two
decimal places.)
Is she better or worse off when given a rebate equal to the sales tax…
Suppose that Felicia gets a tax rebate of
$2,500
to ease the effect of the sales tax. What would her consumption of food be now?
(Again,
use an arc income elasticity to answer this question instead of a point income
elasticity.)
Felicia's consumption of food would now be
nothing
units
Chapter 4 Solutions
Microeconomics (9th Edition) (Pearson Series in Economics)
Ch. 4.A - Prob. 1ECh. 4.A - Prob. 2ECh. 4.A - Prob. 3ECh. 4.A - Prob. 4ECh. 4.A - Prob. 5ECh. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQ
Ch. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Prob. 10RQCh. 4 - Prob. 11RQCh. 4 - Prob. 12RQCh. 4 - Prob. 1ECh. 4 - Prob. 2ECh. 4 - Prob. 3ECh. 4 - Prob. 4ECh. 4 - Prob. 5ECh. 4 - Prob. 6ECh. 4 - Prob. 7ECh. 4 - Judy has decided to allocate exactly 500 to...Ch. 4 - The ACME Corporation determines that at current...Ch. 4 - Prob. 10ECh. 4 - Prob. 11ECh. 4 - Prob. 12ECh. 4 - Prob. 13ECh. 4 - Prob. 14ECh. 4 - Prob. 15ECh. 4 - Prob. 16E
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- A 20% increase in income leads to a 10% decrease in the quantity of hot dogs demanded but the price of hot dogs doesn't change. From this information, we can assume: hot dogs are an inferior good and price elasticity of demand is less than 1. hot dogs are an inferior good and price elasticity of supply is infinite. hot dogs are an inferior good and price elasticity of supply is equal to zero. hot dogs are a normal good and price elasticity of demand is greater than 1arrow_forwardDaria'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_forwardSally Henin has a price elasticity of demand for gasoline of -0.8. Her income elasticity for gasoline is 0.5. Sally's current income is $40,000 per year. Sally currently spends $800 per year on gasoline. The price of gasoline is currently $1.00 per gallon. A contemplated excise tax on gasoline will cause the price of gasoline to rise to $1.40. What impact will the tax have on Sally's consumption of gasoline? Since the purpose of the tax is only to discourage gasoline consumption, Congress is considering a $200 income tax rebate to lessen the burden of the gasoline tax. What impact will the rebates have on Sally's consumption of gasoline? Assume that both the tax and rebate are implemented. Will Sally be worse off or better off?arrow_forward
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