{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}


Quiz3Answers - Extra Credit(3 points Maria has decided...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Economics 20A Winter 2008 Quiz #3 1. (10 points) Susan wants to start her own business, which would require her to buy a factory that costs $400,000. Susan currently has $500,000 in the bank earning 3 percent interest per year. If she buys the factory with her own money, what is the annual opportunity cost of the factory? Answer : $400,000*0.03 = $12,000
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Extra Credit (3 points) Maria has decided always to spend one-third of her income on clothing. What is her income elasticity of clothing demand? Answer : This comes from the textbook, question 5 on page 110. If her income doubles, she will double her spending on clothing. So the income elasticity of demand is 1....
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online