Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 10P
To determine
The nature of the following goods:
(a) Hotdogs, when the consumer consumes
(b) Pork chops, when the consumer consumes
(c) Sockeye salomon, when the consumer consumes
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
James consumes two types of goods: fruit and clothing. Fruits cost him $ 2 per unit, clothing costs $ 25 per unit, and his
income is $ 1,000. He always spends 40% of his income on fruit, regardless of the price of fruit and clothing, as well as his
income.
a. What is the cross-price elasticity of its demand for fruit relative to the price of clothing?
b.What is the elasticity-income of its fruit demand?
Detail your answers.
Imagine your income increases and you find that you buy more coffee. What is true about your income elasticity of demand (Ei) and how you perceive coffee?
Ei > 0 and you view coffee as an inferior good
Ei > 0 and you view coffee as a normal good
Ei < 0 and you view coffee as an inferior good
Ei < 0 and you view coffee as a normal good
4-2
. Answer the following questions.
Name a good you consume for which your income elasticity of demand is positive. What happens when your income increases?
Name a good you consume for which your income elasticity of demand is negative. What happens when your income increases?
Chapter 5 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
Ch. 5 - Prob. 1QCh. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Prob. 4QCh. 5 - Prob. 5QCh. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Why does a demand curve with a constant slope not...Ch. 5 - Prob. 10Q
Ch. 5 - How is the price elasticity of demand calculated...Ch. 5 - Prob. 12QCh. 5 - What can income elasticity of demand tell us about...Ch. 5 - Prob. 14QCh. 5 - Prob. 15QCh. 5 - During an economic slump, such as the 2008...Ch. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Prob. 6PCh. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10PCh. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 1ACh. 5 - Prob. 2ACh. 5 - Prob. 3A
Knowledge Booster
Similar questions
- You have just opened a new grocery store. Every item you carry is generic (generic beer, generic bread, generic chicken, etc.). You recently read an article in the Wall Street Journal reporting that the price of recreation is expected to increase by 15 percent. How will this affect your store’s sales of generic food products?arrow_forwardNadia consumes two goods, food and clothing. The price of food is $2,the price of clothing is $5,and her income is $1,000. Nadia always spends 40 percent of her income on food regardless of the price of food, the price of clothing, or her income.What is her price elasticity of demand for food?arrow_forwardGive an example of a normal good. What will happen to the demand for normal goods if your income goes up?arrow_forward
- What happens to consumption of a normal good when its price increases?arrow_forwardSuppose a consumer had an income of $100 and spends $50 on potatoes. Suppose now that his income goes up to $150, and his spending on potatoes goes up to $100. No prices have changed (so the quantity of potatoes purchased doubled). Compute the consumer’s income elasticity for potatoes.arrow_forwardhow do I illustrate an increase in a price of an item resulting in consumers buying another itemarrow_forward
- If cereal is normal good, this will cause the demand for cereal to increase or decrease.arrow_forwardSuppose a 4 percent increase in income results in a 2 percent decrease in the quantity demanded of a good determine what type of good it is ?arrow_forwardIf an increase in income results in a decrease in the quantity demanded of a good, then the good is a luxury. an inferior good. a normal good. a necessity.arrow_forward
- How do you think income elasticity affects a normal good versus an inferior good? Provide an example.arrow_forwardNorma buys and eats an apple everyday regardless of its price. Which of the following is true with regard to her demand for apples? a. price elasticity of demand is 1 b. price elasticity of demand is greater than 1 c. price elasticity of demand is less than 1 d. price elasticity of demand is 0arrow_forwardSet all variables to their baseline values. How much money do consumers want to spend on spaghetti when the price is $25? Set all variables to their baseline values. The price drops to $23. How much money do consumers want to spend on spaghetti now? What's the elasticity of demand between these prices?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you