Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Question
Chapter 4, Problem 6TY
To determine
Identify the normal goods and inferior goods.
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Which of the following items are likely to be normal goods for a typical consumer? Which are likely to be inferior goods?
Expensive perfume b. Paper plates c. Second hand clothing d. Overseas trips
Cheese and buns are comements. What will happen if cheese becomes less expensive?
Think Critically
• There are factors/determinants influencing the price of a product.
Which is the MOST and LEAST important among the factors
influencing the price of a product and why? Cite 5 examples each.
Chapter 4 Solutions
Economics: Principles & Policy
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Similar questions
- Economists 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_forwardFor most goods if a consumer's income increases his demand for the goods will do what?arrow_forwardWhen consumers' incomes increased 10 percent, the quantity of milk bought increased 5 percent. This result means A. milk is a luxury. B. milk is a necessity. C. the demand for milk is income elastic. D. milk is an inferior good.arrow_forward
- Suppose that a consumer spends a fixed amount of income per month on the following pairs of goods: a.tortilla chips and salsab.tortilla chips and potato chips. movie tickets and gourmet coffee d.travel by bus and travel by subway If the price of one of the goods increases, explain the effect on the quantity demanded of each of the goods. In each pair, which are likely to complement and which are likely to be substituted?arrow_forwardWhich of the following pairs of goods are most likely substitutes? a. Cola and lemon lime soda b. Lettuce and salad dressing c. Peanut butter and gasoline d. Compact discs and compact disc playersarrow_forwardMaria graduates from college and her income increases by $45,000. Nothing else changes. Maria decreases the quantity of donuts and pretzels that she buys and increases the quantity of ski trips that she buys. How would Maria describe these goods? For Maria, A. donuts and ski trips have become substitutes B. ski trips and pretzels are normal goods C. donuts and pretzels have become complements OD. ski trips are normal goodsarrow_forward
- What is the law of demand and how does it explain consumer behavior in response to changes in the price of a good or service?arrow_forwardIdentify the type of goods which have zero cross elasticity of demand. a. Normal goods b. Independent goods c. Dependent goods d. Substitute goodsarrow_forwardIf Goods are not rationed according to price, what happens?arrow_forward
- If price will change, holding other factors constant, the following will happen in the market for a consumerSingle choice. a. There will be a change in quantity demanded. b. There will be a change in quantity supplied. c. There will be a change in demand. d. There will be a change in supply.arrow_forwardNadia consumes two goods, food and clothing. The price of food is $2, the price of clothing is $5, andher income is $1,000. Nadia always spends 40 percent of her income on food regardless of the price offood, the price of clothing, or her income.a. What is her price elasticity of demand for food?b. What is her cross-price elasticity of demand for food with respect to the price of clothing?c. What is her income elasticity of demand for food?arrow_forward
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