FARE 1400 Lecture Notes - Lecture 6: Luxury Goods, Complementary Good, Normal Good

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champagnezebra90

19 Mar 2018

School

University of Guelph

Department

Food, Agricultural and Resource Economics

Course

FARE 1400

Professor

Alfons Weersink

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Document Summary

Inelastic: perfectly inelastic, cross-price elasticity of demand, substitutes, complements, income-elasticity of demand, inferior good, normal necessity, normal luxury, change in demand (increase or decrease in demand) versus a change in the quantity demanded (movement along a demand curve) Suppose an individual"s demand for beef is given by the following equation: Qbeef 197. 49 19. 444 pbeef 5. 248 ppork 0. 0134 y where beefq is beef demand, beefp is the price of beef, porkp is the price of pork, and y is income. Ag econ jeopardy: suppose inflation drives up the price of all goods (including food) and income by the same percent. Suppose an individual"s coffee demand curve is given by the following equation: Q coffee where coffeeq is coffee demand, coffeep is real coffee price, teap is real tea price, , sugarp is real sugar price and y is real income. Assume the milkp is real milk price, following values: coffeep teap milkp sugarp.

Related Questions

1. The concept of price elasticity of demand measures:

a. the slope of the demand curve.

b. the number of buyers in a market.

c. the extent to which the demand curve shifts as the result of a price decline.

d. the sensitiveness of quantities demanded to price changes.

2. When the percentage change in price is less than the resulting percentage change in quantity demanded:

a. demand is elastic.

b. demand is inelastic.

c. demand is unit elastic.

d. none of the above.

3. The elasticity of demand:

a. will be the same at each price-quantity combination on a stable demand curve.

b. tends to be elastic in high-price ranges and inelastic in low-price ranges.

c. tends to be inelastic in high-price ranges and elastic in low-price ranges.

d. is infinitely large for a perfectly inelastic demand curve.

4. Suppose that as the price of Y falls from $2.00 to $1.80 the quantity of Y demanded increases from 110 to 121. It can be concluded that the price elasticity of demand is: _______.

5. Total revenue rises as the price of a good increases if price elasticity of demand is:

a. unitary elastic

b. perfectly inelastic.

6. The demand for such products as salt, bread, and electricity tend to be:

a. relatively price elastic.

b. relatively price inelastic.

c. of unit price elasticity.

d. perfectly price elastic.

coffeeelephant81

If the percentage change in the quantity demanded of a good is less than the percentage change in price, the price elasticity of demand is:

A) Elastic

B) Inelastic

C) Perfectly inelastic

D) Unitary elastic

byzantiummole828

*Please provide the answer but also explain what is inelastic, elastic,unitary elastic

*Please explain elasticity of demand values

*Please explain what is an inferior good, how to obtain the answer.

1) If the price of gasoline increases 10% and quantity demanded decreases by 5%, then the demand curve for gasoline is:

A) inelastic.

B) elastic.

C) unitary elastic.

D) a perfect substitutable good.

2) If a good has an elasticity of demand of 21, then we say the good is:

A) highly inelastic.

B) unitary elastic. C) not elastic.

D) highly elastic.

3) For inferior goods, when an individual's income decreases, quantity demanded for these goods increases.

A) True

B) False

FARE 1400 Lecture Notes - Lecture 6: Luxury Goods, Complementary Good, Normal Good

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