Illustrate the income and substitution effects

Assignment Help Business Economics

Reference no: EM13214998

An individual consumes a positive amount of good X and good Y. As a result of an excise tax on good Y, its price doubles. At her new equilibrium, the individual consumes the same amount of good X as before.

(a) ?With good X on the X-axis and good Y on the Y-axis, illustrate the income and substitution effects of this change in the price of good Y. What kind of good is Y?
(b) ?What can you say about the price elasticity of demand for good Y?
?(c) ?What can you say about the cross price elasticity of demand for good X with respect to the price of good Y?

Reference no: EM13214998

Questions Cloud

Why did superior improve profitability during the period : What is your overall appraisal of the company's cost system and its use in reports to management List the strengths and weaknesses of this system and its related reports for the purposes management uses the system's output.

Describe standard deviation of rate of return on biotech : The payoff is uncertain as well: The present value of profits could be as high as $500 million or as low as $30 million. The risk-free is rate 10%, and the standard deviation of rate of return on biotech products is 35%. The patent's life is estim..

What is the yield to maturity of the bond today : The firm would like to maintain the existing capital structure to finance the new project - The minimum expected return from a new capital investment project is the WACC plus any additional risk premium - what is the yield to maturity of the bond..

Landes account of power satisfy the conditions : Would Landes' account of power satisfy the conditions set by Wajcman? How does power manifest iteself in the development of technology, beyond the obvious military technologies? Could we include the clock among the objects that exercise power?

Illustrate the income and substitution effects : An individual consumes a positive amount of good X and good Y. As a result of an excise tax on good Y, its price doubles. At her new equilibrium, the individual consumes the same amount of good X as before.

What type of format does company use for balance sheet : A corporation's balance sheet presents information as of a point in time. The balance sheet conveys information about a company's assets, liabilities and stockholder's equity. This discussion will provide you with the opportunity to analyze an act..

Arts in your community supported by various agencies : How are the arts in your community supported by various agencies and citizens? Do you think there is enough or not enough support of the arts by these entities? Explain why or why not.

State the value line investment survey provides information : The Value Line Investment Survey provides information for investors. Below, you will find information for Boeing found in the 2009 edition of Value Line

How many of each will olivia purchase : What if jumbo bags now cost $1? For each case draw a budget line that shows her best choice by adding indifference curves. Assume olivia cares only about the of peanuts and not the bag size.

User Account

All Pages