Login
Get Advice on Live Video Call
Earn $ Cash $ with
consultations on Bissoy App

Mensy Ltd produce two goods that have income elasticity values as follows - Good A= -0.5 and Good B= 4. Explain the income elasticity of demand for Good A and Good B.

Md Ariful Islam

0 like 0 dislike
1 views
Share with your friends

1 Answers

Md Ariful Islam

Call
In economics, income elasticity of demand measures the responsiveness of the demand for a good to a change in the income of the people demanding the good, ceteris paribus. It is calculated as the ratio of the percentage change in demand to the percentage change in income. bull; A negative income elasticity of demand is associated with inferior goods; an increase in income will lead to a fall in the demand and may lead to changes to more luxurious substitutes. bull; A positive income elasticity of demand is associated with normal goods; an increase in income will lead to a rise in demand. If income elasticity of demand of a commodity is less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a superior good. bull; A zero income elasticity (or inelastic) demand occurs when an increase in income is not associated with a change in the demand of a good. These would be sticky goods. So, good A is inferior good, and good B is normal good. If the income rises, the demand for good A will fall and demand for good B will rise.
0 like 0 dislike
1 views
Mensy ltd, produce two goods that have income elasticity values as follows- Good A= -0.5 and Good B=4. a) explain the income elasticity of demand for good A and good B

Income elasticity for Good A is -0.5. It means that when income increases on one point, consumption of this Good A decreases on 0.5 points. It can be some cheap...

1 Answers 1 views
dishtinguish between substitutes goods and complementary goods. dishtinguish between superior or normal goods,inferior goods.

The difference between substitute and complimentary is:A substitute is something used instead of a particular good or service, eg. for dinner , if you decide to eat beef instead of...

1 Answers 1 views
a consumer spends all her income on goods x and y if a 50% interest good x does not change the amount consumed of good y what is the elasticity of demand for good x

If consumer spends all her income on goods x and y if a 50% interest good x does not change the amount consumed of good y, the elasticity of demand...

1 Answers 1 views
Explain the concept of income elasticity of demand. How is it used to identify normal goods, luxuries, necessities, and inferior goods? Be as specific and logical as possible.

Income elasticity of demand measures the responsiveness of demand to a change in income. Depending on the value of the income elasticity coefficient products are divided into normal goods, luxuries,...

1 Answers 1 views
Assume that you decide to spend a quarter of your income on clothes. What is (a) your income elasticity of demand; (b) your price elasticity of demand?

(a) Your income elasticity of demand; The income elasticity of demand=1Income elasticity of demand refers to sensitivity of quantity demanded for a particular product to change in income of consumers...

1 Answers 1 views
Distinguish among public goods, private goods, common resources, natural monopoly goods and mixed goods.

A private good is both rival and excludable this means that consumption is rival and consumers can be excluded. For instance a can of pineapples is a private good while...

1 Answers 1 views
An individual spends all his income on two goods X and Y. If with the rise in price of good X, the quantity purchased of good Y remains unchanged, what is the price elasticity of demand for X?

The quantity purchased of good Y remaining the same even when the price of good X rises, shows that the expenditure of good Y (Py, Qy) remains constant with a...

1 Answers 1 views
Suppose that a decrease in the price of X results in less of good Y sold. This would mean that X and Y are A. complementary goods B. substitute goods C. unrelated goods D. normal goods

X and Y are substitute goods because a decrease in price of X means that consumers will demand more of X .Demand for good Y will decrease because consumers will...

1 Answers 1 views
Mensy Ltd produces two goods that have income elasticity values as follows. Good A=-0.5 and good B=4 Explain the income elasticity of demand for good A and good B

The Income Elasticity of Demand measures the rate of response of quantity demand due to a raise (or lowering) in a consumers income. Good A has IEoD < -0.5. It...

1 Answers 1 views
What type of goods are gas and electricity if the cross elasticity of demand between these two goods are positive. .Normal goods .Complements .Substitutes .Inferior goods

Substitutes 

1 Answers 1 views

Log in to ask questions, provide answers, or leave comments.


Login

Install the Bissoy app to consult with a doctor.


Download