Homework: Chapter 4 Homework
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? Question 11, Exercise 11
11 of 11 (11 complete)
Suppose the income elasticity of demand for food is 0.45 and the price elasticity of
demand is -1.00. Suppose also that Felicia spends $10,000 a year on food, the
price of food is $2, and that her income is $25,000.
If a sales tax on food caused the price of food to increase to $2.50, what would
happen to her consumption of food? Because a large price change is involved,
use the arc elasticity to measure the price elasticity of demand rather than a point
elasticity.
Felicia's consumption of food would decrease by
units. (Enter your response rounded to two
decimal places.)
Enter your answer in the answer box and then click Check Answer.
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HW Score: 81.82%, 9 of 11 pts
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