Question
In: Economics
Complete the following sentence. If, as Paula's income increases, her demand for hot dogs decreases, then...
Complete the following sentence. If, as Paula's income increases, her demand for hot dogs decreases, then for Paula, hot dogs are _______. A. a substitute B. a complement C. an inferior good D. a normal good
Solutions
Expert Solution
Option C is correct
Inferior good has a negative income elasticity which indicates that whenever there is an increase in the income of the consumer, the demand for such a good decreases. In this case also the demand for hot dogs decrease is when the income of Paula increases. Therefore hotdogs are inferior good.
Rahul Sunny answered 1 year agoRelated Solutions
If Linda's income decreases by 15% and her expenditure on DVDs increases by 10%, Linda's price...
If Linda's income decreases by 15% and her expenditure on DVDs
increases by 10%, Linda's price elasticity of demand for DVDs
is:
A. inelastic
B. positive
C. cannot be determined from the information given
D. unit elastic
E. highly responsive
Pl explain why the selected answer is correct and also explain
in one-two line why other answers are incorrect.
Suppose the market for cau-hot-dogs is characterized by the following daily demand and supply curves. Drawing...
Suppose the market for cau-hot-dogs is characterized by the
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curves will help you find the right answers. Demand curve: P = 1300
- Q Supply curve: P = 180 + 9Q .Suppose the government requires the
seller to pay 10% of the final price of a cau-hot-dog as an ad
valorem tax.
1. What is the gross price of a cau-hot-dog in this case? What
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Assume income increases/decreases. Graph the outcomes in the
following cases:
A. X is normal, Y is normal.
B. X is inferior, Y is normal.
C. X is normal, Y is inferior.
D. Prove that X and Y cannot both be inferior. Assuming income
increases, which axiom would be violated?
If income increases by 12 percent and the quantity demanded of a good then decreases by...
If income increases by 12 percent and the quantity demanded of a
good then decreases by 6 percent, the good is:
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D) normal and income-elastic.
Use supply-demand diagrams to illustrate the situation in which demand increases and supply decreases at the...
Use supply-demand diagrams to illustrate the
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same
time. Indicate what the model predicts regarding the price change
and
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when the law of increasing cost , the demand decreases and supply increases ? for example...
when the law of increasing cost , the demand decreases and supply
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increases ? can you help explains ?
Does Engel's law (as income increases, the % of income spent on food decreases) hold true...
Does Engel's law (as income increases, the % of income spent on
food decreases) hold true for the poor? Why or why not?
Completed If product demand is high, a firm's demand for labour _______ (increases/decreases/remains unchanged). Because of...
Completed
If product demand is high, a firm's demand for labour _______
(increases/decreases/remains unchanged). Because of this we say
labour demand is a ______ demand. How can we demonstrate this
phenomenon on a graph of labour demand?
Evaluate the following statements: “Moral hazard behavior decreases when the price elasticity of demand increases.” “Managed...
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demand increases.”
“Managed care creates incentives that improve the
principal-agent relationship.”
“Adverse selection and favorable/preferred selection make
health insurance more affordable.”
Choose the correct answer to complete the following sentence. Income from cancellation of debt: Is only...
Choose the correct answer to complete the following sentence.
Income from cancellation of debt:
Is only excluded from income if the buyer is insolvent.
Is not excludable from income if the buyer is insolvent.
May be excluded to the extent the buyer has negative net
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Is taxable to the extent that the buyer has negative net
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