When Frank's income was $100 per week, 10 units of good A were demanded. Now his income is $150 per week and 12 units of good A are demanded. Using the percentage change formula, the income elasticity of demand for good A equals
A) 0.45.
B) 0.40.
C) 2.20.
D) 2.50.
Answer: A
You might also like to view...
Due to the recession in 2008, firms decreased their profit expectations. As a result, there was a ________ shift in the ________ loanable funds curve
A) rightward; supply of B) leftward; demand for C) rightward; demand for D) rightward, supply of
Suppose a new technology allows firms to substitute mechanical tomato pickers for farm laborers. As a result, the demand curve for farm laborers will
A) become less elastic. B) become more elastic. C) shift to the right. D) not be affected.
Although growth rates across countries vary some, rankings of countries by income remain pretty much the same over time
a. True b. False Indicate whether the statement is true or false
Refer to the above figure. The rational expectations hypothesis implies that an anticipated decrease in aggregate demand from AD2 to AD1 will
A. shift the aggregate supply (AS) curve to the left. B. move the economy from b to c. C. move the economy from c to a. D. move the economy from b to a.