Question

1. Use the following table to answer the questions below. Table 1. The amount of pasta and rice that is purchased when average income is $11,000 and $14,000 and when the price of rice increases from $0.60 to $0.65. Price of Pasta Quantity of Pasta Quantity of Pasta Quantity of Pasta $0.49 Income = $11,000 Income = $14,000 Income = $11,000 $0.79 Price of Rice = $0.60 Price of Rice = $0.60 Price of Rice = $0.65 $1.19 30 24 32.8 20 16 22.1 12 8 13.6 a) Assume that the price of rice is $0.60 and average income is $11,000. What is the price elasticity of demand for pasta if the price of pasta increases from $0.49 to $0.79? Is demand elastic or inelastic around these prices? (2 marks) Insert answer here b) Assume that the price of pasta is $1.19 and average income is $11,000. If the price of rice increases from $0.6 to $0.65, what is the cross-price elasticity of demand between pasta and rice? Are pasta and rice substitutes or complements? (2 marks) Insert answer here c) Assume that the price of pasta is $1.19, and the price of rice is $0.60. If average consumer incomes increase from $11,000 to $14,000, what is the income elasticity of demand for pasta? Is pasta a normal or an inferior good? (2 marks) Insert answer here

          1. Use the following table to answer the questions below.
Table 1. The amount of pasta and rice that is purchased when average income is
$11,000 and $14,000 and when the price of rice increases from $0.60 to $0.65.
Price of Pasta
Quantity of Pasta
Quantity of Pasta
Quantity of Pasta
$0.49
Income = $11,000
Income = $14,000
Income = $11,000
$0.79
Price of Rice = $0.60 Price of Rice = $0.60 Price of Rice = $0.65
$1.19
30
24
32.8
20
16
22.1
12
8
13.6
a) Assume that the price of rice is $0.60 and average income is $11,000. What is
the price elasticity of demand for pasta if the price of pasta increases from $0.49
to $0.79? Is demand elastic or inelastic around these prices? (2 marks)
Insert answer here
b) Assume that the price of pasta is $1.19 and average income is $11,000. If the
price of rice increases from $0.6 to $0.65, what is the cross-price elasticity of
demand between pasta and rice? Are pasta and rice substitutes or
complements? (2 marks)
Insert answer here
c) Assume that the price of pasta is $1.19, and the price of rice is $0.60. If average
consumer incomes increase from $11,000 to $14,000, what is the income
elasticity of demand for pasta? Is pasta a normal or an inferior good? (2 marks)
Insert answer here

1. Use the following table to answer the questions below.
Table 1. The amount of pasta and rice that is purchased when average income is
11,000 and14,000 and when the price of rice increases from 0.60 to0.65.
Price of Pasta
Quantity of Pasta
Quantity of Pasta
Quantity of Pasta
0.49
Income =11,000
Income = 14,000
Income =11,000
0.79
Price of Rice =0.60 Price of Rice = 0.60 Price of Rice =0.65
1.19
30
24
32.8
20
16
22.1
12
8
13.6
a) Assume that the price of rice is0.60 and average income is 11,000. What is
the price elasticity of demand for pasta if the price of pasta increases from0.49
to 0.79? Is demand elastic or inelastic around these prices? (2 marks)
Insert answer here
b) Assume that the price of pasta is1.19 and average income is 11,000. If the
price of rice increases from0.6 to 0.65, what is the cross-price elasticity of
demand between pasta and rice? Are pasta and rice substitutes or
complements? (2 marks)
Insert answer here
c) Assume that the price of pasta is1.19, and the price of rice is 0.60. If average
consumer incomes increase from11,000 to 14,000, what is the income
elasticity of demand for pasta? Is pasta a normal or an inferior good? (2 marks)
Insert answer here

Added by Jeanette J.

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