Suppose that during the 1940s, the income elasticity of maple syrup was estimate
ID: 1206567 • Letter: S
Question
Suppose that during the 1940s, the income elasticity of maple syrup was estimated to be about +1.5. Today, the income elasticity for maple syrup is -0.74. This would imply that over the last several decades: a. Maple syrup has changed from an inferior to a normal good. Maple syrup has changed from a normal to a luxury good.c.Maple syrup has changed from a luxury good to an inferior good.d.Maple syrup has changed from a normal good to an inferior good. An income elasticity is used to estimate the impact of a:a.Change in the price of a substitute on consumer income.b.Change in consumers' incomes on supply.c.Change in consumers' incomes on demand.d.Movement along the demand curve on price.A USD A study showed that even if salty snack foods were taxed at a rate of 20%, consumption of these food items would only be reduced 4-6 ounces annually (that's the equivalent of about 4-6 snack size bags of potato chips). The most likely reason the quantity decrease is so minimal is because: The tax rate was too big. The demand for salty snack foods is inclastic. Salty snack foods arc an inferior good. The supply for salty snack foods is clastic.A research team has shown that the consumption of freeze-dried strawberries has the potential to prevent certain cancers. Given this information, if there was an increase in the demand for strawberries, then the impact on strawberry price would best be measured by using the: Elasticity of demand. Elasticity of supply. Income elasticity. Cross-price elasticity.Explanation / Answer
14. d) Maple syrup has changed from a normal good to an inferior good.
Normal good is the good whose demand increases due to increase in the income while inferior goods are those goods whose demand decreases when income of the person increases. In 1940s, increase in income causes more increase in the demand of Maple syrup as a result, elasticity of demand is 1.5 but now increase in income of consumer causes fall in the demand of Maple syrup. So, now Maple syrup become inferior good from normal good.
15. c) Change in consumers' incomes on demand.
16. b) The demand for salty snack food is inelastic.
17. a) Elasticity of demand as demand of commodity will decrease minorly.
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