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Chapter 4, Midterm Info, and Chapter 5 - Class #5 (Check for Diagrams)

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Professor Cottrel

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Class 5Chapter 4 Cont Sept 29 2011Income ElasticityResponsiveness of Demand to a change in IncomenIDELTA QdDELTA IncomenI0 Normal GoodnI1 Income ElasticnI1 Income InelasticnI0 Inferior GoodAs income increasesQuantity demanded decreasesNormal Good Luxury GoodsnI1 Income Elasticpositive As income increasesQuantity demanded increases by a greaterthan income increasesnI1 Income Inelasticpositive As income increasesQuantity demanded increases by a smallerthan income increasesProblem1 goodowersIncome increases from 40000 to 50000Find the income elasticity of demandNormal Good or Inferior goodExplainPriceQdQ6dFlowersFlowersFlowersIncome40000Income50000100200250200160220 Price of owers constantnIDELTA QdDELTA IP1nI2502002502002500004000050000400002nl50251000045000
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