MindTap-Cengage Learning Microeconomics (College lntr × New Tab × C ng.cengage.c
ID: 2931496 • Letter: M
Question
MindTap-Cengage Learning Microeconomics (College lntr × New Tab × C ng.cengage.com/static/nb/ui/index.html?nbld-641360&nbNodeld-236852373;&deploymentid;=5673661 88950405672861 1025470&eISBN-9781337096577; MINDTAP From Cengag David Greene (? Quiz 5 (Chapter 5: Elasticity and Its Application) Due Today at 1 1:59 PM EDT 7. Using the income elasticity of demand to characterize goods Data collected from the economy of Royal City reveals that a 15% decrease in income leads to the following changes: A 9% increase in the quantity of clubs demanded ·A 17% decrease in the quantity of horses demanded * A 29% decrease in the quantity of aces demanded A-Z Compute the income elasticity of demand for each good and use the dropdown menus to complete the first column in the following table. Then, based on its income elasticity, indicate whether each good is a normal good or an inferior good. (Hint: Be careful to keep track of the direction of change The sign of the income elasticity of demand can be positive or negative, and the sign confers important information.) Good Clubs Horses Aces Income Elasticity of Demand Normal or Inferior Good Which of the following three goods is most likely to be classified as a luxury good? Clubs Horses ore)Explanation / Answer
Income Elasticity of demand
Clubs = -0.6 , infrrior
Horses = 1.133,normal
Aces = 1.933 ,normal
Luxary good Aces