1) When the average incomes of its buyers were $60,000 per year, a certain cereal sold 1.2 million units. When incomes increased to $65,000 per year, the cereal sold 1.4 million units. Calculate the appropriate elasticity.

2) The cereal described in the last question

A. has demand that is price elastic

B. has a demand that is price inelastic

C. has a demand that is unit elastic

3) The cereal is

A. A normal good

B. An inferior good

C. A substitute

D. A complement

E. A luxury good

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Yusra AneesLv10

28 Sep 2019

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Related questions

A- Think of another good that you have purchased recently Be specific (e.g. is it breakfast cereal in general or Cheerios cereal specifically). If the price of this item increases, how would this affect the quantity of the good that you consume? Is the Demand for this good Price elastic or Price inelastic? Justify your classification by talking about the determinants of elasticity as they apply to this product. Say price is on the rise for this product and you are the manager of a store, would you be thrilled to be selling this product? Under what circumstances would you want to own a business that sells this product? In other words, how does an increase in price for this good affect your Total Revenue? Using specific examples, relate the concepts of Cross Elasticity and Income Elasticity to this product.

B- What changes do you make to your demand for gasoline when the prices start to climb up?

C- Would you want to own a business that sells price-elastic products or price-inelastic products? Why?

*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

Bob of Bob's Burgers used to charge $2.50 for a certain hamburger and sold 4000 units. When he increased the price by $1, he sold 2800 units. Calculate the hamburger's price elasticity of demand.

Bob's total revenue goes _____ as a result of the price change described in the previous question because demand for the burger is relatively _______ with respect to price.

A. up;elastic,

B. down; elastic,

C. up; inelastic,

D. down; inelastic

E. none of the above