If rice is an inferior, then: A decrease in income causes increase in quantity demanded, shifts...

If rice is an inferior, then:

A decrease in income causes increase in quantity demanded, shifts D curve to the right
A decrease in income causes increase in quantity demanded, shifts S curve to the right
A decrease in income causes increase in quantity demanded, shifts D curve to the left
A decrease in income causes increase in quantity demanded, shifts S curve to the left

Suppose a producer is able to separate customers into two groups, one having an inelastic demand and the other having an elastic demand. If the producer’s objective is to increase total revenue, he should:

Decrease the price charged to customer with the elastic demand and increase the price charged to customer with the inelastic demand
Increase the price for both groups of customers
Increase the price charged to customer with the elastic demand and decrease the price charged to customer with the inelastic demand
decrease the price for both groups of customers

Which of the following is likely to have the most price inelastic demand?

MP3 players
Laptop computers
Designer jeans
School fees for students

If chicken is a normal good, then:

An increase in income causes increase in quantity demanded, shifts D curve to the left
An increase in income causes increase in quantity demanded, shifts S curve to the left
An increase in income causes increase in quantity demanded, shifts D curve to the right
An increase in income causes increase in quantity demanded, shifts S curve to the right

Solutions

Expert Solution

1) Solution: A decrease in income causes increase in quantity demanded, shifts D curve to the right
Explanation: When the good is an inferior good the demand will be negatively related to income. A rise in income shifts D curves for inferior goods to the left.
2) Solution: decrease the price charged to customers with the price elastic demand and increase the price charged to customers with the price inelastic demand
Explanation: The consumers with an elastic demand should not be charged high while consumers with an inelastic demand should be charged high
3) Solution: School fees for students
Explanation: Inelastic demand arises when the demand of buyers does not change with the price changes.
4) Solution: An increase in income causes increase in quantity demanded, shifts D curve to the right
Explanation: When the good is a normal good the demand will be positively related to income. A rise in income shifts D curves for normal goods to the right

Rahul Sunny answered 1 year ago

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