KIC000072 - i Student" Instructor kolthoom alkofahi...

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Unformatted text preview: i Student" Instructor: kolthoom alkofahi Assigniem: HW (3116- 2 ‘Dme:10.-'21.-=09 Course: Eco 2301-05 Time: 12:24 PM Book: I-Iubbmd—‘O'Brien: Microeconomics 3e 1 1_ If you expect the economy is going to boom and average income in the economy will rise in the foreseeable future. the type of firm that would be able to increase its sales if your expectations are met is A one that sells a necessity good. : _. : E3 one that sells a price inelastic good. ‘ ‘3, one that sells an inferior good. V E: one that sells a luxury good. 12‘ Last year, Sefion purchased 60 pounds of potatoes to feed his family of five when his household income was $30,000. This year, his household income fell to $20,000 and Sefton purchased 80 pounds of potatoes. All else constant, Sefton’s income elasticity of demand for potatoes is A positive. so Sel'ton considers potatoes to be an inferior good. =3 negative, so Seflon considers potatoes to be a normal good. .V :1: negative. so Sefion considers potatoes to be an inferior good. positive. so Seflon considers potatoes to be a normal good and a necessity. & Refer to the diagram to the right. The data indicates that DVDs Market for DVD: 25 V. . are luxury goods. 24 S are price inelastic goods. are necessities. 29 are both necessities and price inelastic : 16 I goods. if 1 . . . ”‘ 12— are both luxury goods and pnce inelastic J' goods. 83 l D [I = 4.000; 44: D u = 3.000) 0 i : . l— 0 5 13 15 20 25 30 35 40 45 Quantir} Page 4 ...
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