+1-415-670-9189
info@expertsmind.com
Problem - income elasticity of demand
Course:- Macroeconomics
Length: Word Count: 260
Reference No.:- EM1330




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Macroeconomics

Question: Suppose the income elasticity of demand for pre-recorded music compact disks is +4 and the income elasticity of demand for a cabinet maker's work is +0.4.  Compare the impact on pre-recorded music compact disks and the cabinet maker's work of a recession that reduces consumer incomes by 10 per cent.

(a)     How might you determine whether the pre-recorded music compact discs and MP3 music players are in competition with each other?

(b)     Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5

(c)     Interpret the following Cross-Price Elasticities of Demand (XED) and explain the relationship between these goods. XED= + 0.64 and XED= -2.6




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Macroeconomics) Materials
If the velocity of circulation is growing at one percent a year, the real interest rate is two percent a year, the nominal interest rate is seven percent a year, and the gro
Analyze the effect of the political economy on trade agreements and policy. Analyze the various countries to which the United States actively trades or has an embargo upon.
Assume that full-employment GDP is £500 billion and that current GDP is £450 billion. Assume also that the mpcd is 4/5. (a) Is there an inflationary or deflationary gap?
For each of the following acts, provide a summary of the act, a real word example of how the act was violated, the role of the EEOC in and what the organization can do to en
The emergence of giant multinational corporations is said to have altered the very nature of international economic activity. In what ways do these MNCs affect the structure
Determine patterns of economic growth or decline during this time period, and develop the most optimal forecasting model for the next 2 years. Note that you will need to set
Banks are holding nearly $2.5 trillion in excess reserves. Explain why increased business uncertainty about future sales coupled with asymmetric information could explain w
Discuss how the Foundations of Capitalism and the Planks of the Communist Manifesto are similar. Discuss how they differ. Discuss three ways in which your current life is diff