Income elasticity, Microeconomics

With the recession, average incomes have fallen from $44,375 to $41,720.  Before the recession Groucho's Gizmos sold 600 gizmos a month. As an economics, predict the number of gizmos that will be sold for the following income elasticities and explain what type of good a gizmo is in the eyes of consumers (you must use the income elasticity coefficient to explain your answer).

a)  EI = 1.5       b)  EI = 0.5      c)  EI = -2.0

Posted Date: 3/7/2013 4:48:37 AM | Location : United States







Related Discussions:- Income elasticity, Assignment Help, Ask Question on Income elasticity, Get Answer, Expert's Help, Income elasticity Discussions

Write discussion on Income elasticity
Your posts are moderated
Related Questions
The Standard Indifference Curve Diagram. The standard model of labour leisure choice does not distinguish between females and males. It is a unisex model. The vertical axis gives

Q. Define Contribution Pensions? Defined Contribution Pensions: A pension plan which makes no specified promise about level of pension paid out after retirement. In its place,

What is Game Theory?  Game Theory is a mathematical method of decision-making in which a competitive situation is examined to verify the optimal course of action for an interes

Assume that the market for lamb is perfectly competitive. Using an appropriate model (or models) illustrate and explain a. How a competitive market arrives at equilibrium


Question 1: i) Derive and explain Harberger's (1954) welfare loss estimates of monopolizing a perfectly competitive firm. ii) What are the roles of advertising? Can it lead

If the inverse demand curve is p=120-Q and the marginal cost is constant at 10, how does charging the monopoly a specific tax of r=10 per unit affect the monopoly optimum and the w

Monica consumes only goods A and B. Suppose that her marginal uility from consuming good A is equal to 1/Qa, and her marginal utility from consuming good B is 1/Qb. If the price of

Aggregate Supply When referred to in the circumstance of GNP or GDP, aggregate supply refers to the labor and capital needs to proceeds the level of products and services need

The price of oil increases because OPEC reduces oil production