In a study published in 1980, B.B. Gibson estimated the following price and inco

Question

In a study published in 1980, B.B. Gibson estimated the following price and income elasticities of demand for six type of public goods. State Activity Price Elasticity Income Elasticity Aid to needy people -0.83 0.26 Pollution control -0.99 0.77 Colleges and universities -0.87 0.92 Elementary school aid -1.16 1.14 Parks and recreation areas -1.02 1.06 Highway construction and maint -1.9 0.99 (a) do these public goods conform to the law of demand? For which public goods is demand price elastic? (b) What types of goods are these public goods? (c) If the price or cost of college and university education increase by 10 percent and, at the same time, incomes also increase by 10 percent, what would be the change in the demand for college and university education?

Explanation / Answer

http://en.wikipedia.org/wiki/Price_elasticity_of_demand http://en.wikipedia.org/wiki/Public_good#Terminology.2C_and_types_of_goods http://en.wikipedia.org/wiki/Higher_education_bubble

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