Microeconomics (2nd Edition) (Pearson Series in Economics)
Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Chapter 5, Problem 10P
To determine

The nature of the following goods:

(a) Hotdogs, when the consumer consumes 10% fewer hot dogs given there is a rise in income by 20%.

(b) Pork chops, when the consumer consumes 5% more pork chops given there is a rise in income by 20%.

(c) Sockeye salomon, when the consumer consumes 30% more sockeye salmon given there is a rise in income by 20%.

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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?
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