Billy's income elasticity of demand for ground beef is -0.5 and his income elasticity of demand for pork chops is 1.2 . Is ground beef a normal or inferior good? Explain. What about pork chops?
What will be an ideal response?
Because his income elasticity of demand for ground beef is negative, Billy views ground beef as an inferior good. Because his income elasticity of demand for pork chops is positive, Billy views pork chops as a normal good.
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Refer to Figure 13.1. All else equal, a decrease in income taxes would best be represented by a movement from
A) point A to point B. B) point B to point A. C) point B to point C. D) point C to point B.
The prisoner's dilemma provides an explanation for
a. the price wars that sometimes occur in oligopolies b. the ability of firms in an oligopoly to extract the entire consumer surplus c. the collusive behavior that sometimes occurs in an oligopoly d. the failure of firms in non-competitive industries to maximize profits e. an irrational behavior that occurs in competitive markets
When the interest rate increases, the opportunity cost of holding money
a. increases, so the quantity of money demanded increases. b. increases, so the quantity of money demanded decreases. c. decreases, so the quantity of money demanded increases. d. decreases, so the quantity of money demanded decreases.
If inflation in the United States is higher than in Japan, what will happen to the exchange rate between the U.S. dollar and the Japanese yen?
What will be an ideal response?