Question

1. The cross price elasticity between good X and good Y is 0.5. a. What type of goods are these? b. If the price of good X increases by 10%, what happens to the demand for good Y? c. Show this on a graph. d. Assuming that supply is upward sloping, what can you say about the change in the equilibrium quantity of good Y? 2. For each of the following say what the effect on demand will be. a. Increase in price b. Increase in income for an inferior good. c. Decrease in income for a normal good. d. Decrease in the price of a compliment. 3. When Tom's income increases from 20,000 to 25,000, his demand for Taco Bell products decreases by 10%. a. What is Tom's income elasticity for Taco Bell? b. What type of good is Taco Bell for Tom (around the income level given above)? 4. How can the quantity demanded of a good change when there has been no change in demand?

          1. The cross price elasticity between good X and good Y is 0.5.
a. What type of goods are these?
b. If the price of good X increases by 10%, what happens to the
demand for good Y?
c. Show this on a graph.
d. Assuming that supply is upward sloping, what can you say
about the change in the equilibrium quantity of good Y?
2. For each of the following say what the effect on demand will
be.
a. Increase in price
b. Increase in income for an inferior good.
c. Decrease in income for a normal good.
d. Decrease in the price of a compliment.
3. When Tom's income increases from 20,000 to 25,000, his
demand for Taco Bell products decreases by 10%.
a. What is Tom's income elasticity for Taco Bell?
b. What type of good is Taco Bell for Tom (around the income
level given above)?
4. How can the quantity demanded of a good change when there
has been no change in demand?

1. The cross price elasticity between good X and good Y is 0.5.
a. What type of goods are these?
b. If the price of good X increases by 10%, what happens to the
demand for good Y?
c. Show this on a graph.
d. Assuming that supply is upward sloping, what can you say
about the change in the equilibrium quantity of good Y?
2. For each of the following say what the effect on demand will
be.
a. Increase in price
b. Increase in income for an inferior good.
c. Decrease in income for a normal good.
d. Decrease in the price of a compliment.
3. When Tom's income increases from 20,000 to 25,000, his
demand for Taco Bell products decreases by 10%.
a. What is Tom's income elasticity for Taco Bell?
b. What type of good is Taco Bell for Tom (around the income
level given above)?
4. How can the quantity demanded of a good change when there
has been no change in demand?

Added by Matthew M.

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