In a study published in 1980, B.B. Gibson estimated the following price and income elasticities of...

In a study published in 1980, B.B. Gibson estimated the following price and income elasticities of demand for six types of public goods.

State Activity Price Elasticity Income Elasticity

Aid to the poor -.83 .26

Pollution control -.99 .77

College and universities -.87 .92

Elementary school aid -1.26 1.14

Parks & recreation areas - 1.09 1.06

a. Do these public goods conform to the law of demand? Which goods are elastic? Explain. b. Which goods are normal goods and which are inferior? Explain.

c. If the price of education increase by 10% and incomes increased by 8% what would be the change in demand for college and university education? Explain.

Expert Solution

Rahul Sunny answered 1 year ago

The table below provides information regarding price elasticities, income elasticities and cross-price elasticities of demand. Answer...

The table below provides information regarding price elasticities, income elasticities and cross-price elasticities of demand. Answer the following questions by using the information from this table. Commodity Price Elasticity Income Elasticity Price change in this commodity Cross-price Elasticity Electricity (at home) 0.15 0.25 Natural Gas 0.35 Restaurant Meals 1.9 2.5 ---- ---- Coffee 0.25 ----- Milk -0.15 Bread 0.20 -0.10 ---- ---- a. Which commodities are normal and which are inferior? b. Which commodities are complements and which are substitutes?...

4) The estimated price elasticities of demand for certain products are listed in the table. Indicate...

4) The estimated price elasticities of demand for certain products are listed in the table. Indicate if Product B would have a more elastic or less elastic demand and why. Product A Estimated Elasticity for Product A Product B Is Estimated Elasticity for Product B More Elastic or Less Elastic than for Product A? Beer -0.29 Samuel Adams Boston Lager Chicken -0.37 Organically raised chicken Cocaine -0.28 Illegal narcotics Cigarettes -0.25 Marlboro Lights

Economists have estimated the following transportation elasticities. For each pair, explain possible reasons why the elasticities...

Economists have estimated the following transportation elasticities. For each pair, explain possible reasons why the elasticities differ. University of Richmond Professor Erik Craft analyzed the states’ pricing of vanity plates. He found that in California, where vanity plates cost $28.75, the elasticity of demand was 0.52. In Massachusetts, where vanity plates cost $50, the elasticity of demand was 3.52. a. Assuming vanity plates have zero production cost and his estimates are correct, was each state collecting the maximum revenue it...

a) What other elasticities of demand are there besides price, income, and cross price? (1mk) (b)...

a) What other elasticities of demand are there besides price, income, and cross price? (1mk) (b) What is the usefulness to the firm of the elasticity of demand over which the firm has control? (2.5 marks) (C) Why is it essential for the firm to use the elasticity of all the variables included in the demand function? (2.5 marks)

Explain the differences among price elasticity, mid-point elasticity; Income and Cross Price elasticities.

A-) An explanation of structuralism B-) Prebisch - Singer hypothesis C-) Price and income elasticities of...

A-) An explanation of structuralism B-) Prebisch - Singer hypothesis C-) Price and income elasticities of demand D-) empirical evidence from newly Industrialised countries of south east asia E-) Protectionism and its consequenses F-) An argument on free trade vs protectionism

The management of the Mini Mill Steel Company estimated the following elasticities for a special type...

The management of the Mini Mill Steel Company estimated the following elasticities for a special type of steel: EP 2, 1, and E where x refers to steel XY and Y to aluminum. Next year, the firm would like to increase the price of the steel it sells by 6 percent. The management forecasted that income will rise by 4 percent next year and that the price of aluminum will fall by 2 percent. (a) If the sales this year...

Given the price elasticities and price changes for the following products A–E in the table below,...

Given the price elasticities and price changes for the following products A–E in the table below, show how much the quantity will change (indicating an increase or decrease) and what effect this will have on total revenue (indicating an increase or decrease). Round your answers to 1 decimal place. Product Price elasticity % ∆ Price %∆ Quantity ∆ Total revenue A 0.6 increase by 9% (Click to select) decrease increase by % (Click to select) increase decrease constant B 1.3 decrease by 6% (Click to select) increase decrease by % (Click...

Income statements for Gibson Company for Year 3 and Year 4 follow: GIBSON COMPANY Income Statements...

Income statements for Gibson Company for Year 3 and Year 4 follow: GIBSON COMPANY Income Statements Year 4 Year 3 Sales $ 200,000 $ 180,000 Cost of goods sold 143,400 121,400 Selling expenses 22,000 20,000 Administrative expenses 12,900 14,900 Interest expense 3,800 5,800 Total expenses $ 182,100 $ 162,100 Income before taxes 17,900 17,900 Income taxes expense 5,400 3,500 Net income $ 12,500 $ 14,400 Required a. Perform a horizontal analysis, showing the percentage change in each income statement component...

"In 1980 your income was $30,000 and the Consumer Price Index (CPI) was 100. In 1990...

"In 1980 your income was $30,000 and the Consumer Price Index (CPI) was 100. In 1990 you income was $45,000 and the CPI stood at 150. Which of the following is correct?" Your 1980 nominal income was higher than your 1990 nominal income. Your real income was roughly the same in 1980 as in 1990. Your real income was higher in 1990 than in 1980. Your real income was lower in 1990 than in 1980. Question 9 In the Circular...

Question