Economics 6(3,4,5,6)

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The family farm has been disappearing because

the demand for food has not increased proportionally with increases in​ income, and increases in the supply of food have resulted in significant decreases in food prices. Your answer is correct.D.

Is it possible to tell from the income elasticity of demand whether a product is a luxury good or a​ necessity?

Yes. If the income elasticity of demand is greater than​ 1, then the good is a luxury. If the income elasticity of demand is positive but less than​ 1, then the good is a necessity.

In a​ recession, sales of a good with

an income elasticity of demand greater than one will decline the most and sales of a good with an income elasticity of demand less than zero will increase the most.

If the​ cross-price elasticity of demand is​ negative, then the products​ are:

complements, but if it is​ positive, then the products are substitutes

For a normal​ good, the income elasticity of demand will be

positive, but for an inferior​ good, the income elasticity of demand will be negative.

Income elasticity of demand is

the percentage change in quantity demanded divided by the percentage change in income.

The​ cross-price elasticity of demand is

the percentage change in quantity demanded of one good divided by the percentage change in the price of another good.

The formula for the price elasticity of supply is

the percentage change in quantity supplied divided by the percentage change in price.


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