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AndrewKraus AndrewKraus
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6 years ago
a.   Classify and draw the demand curves for two goods with the following price elasticities of demand:
i)   Price elasticity of demand = ∞
ii)   Price elasticity of demand= 0

b.   Consider two goods: A and B. Good A has many close substitutes while Good B has a few. An individual spends an equal amount of his budget on both goods. Given this information, which of the two goods will have a higher price-elasticity of demand?

c.   Consider two goods: A and B. Both goods have the same number of substitutes but consumers spend a higher proportion of their income on Good A than on Good B. Given this information, which of the two goods will have a higher price-elasticity of demand?
Textbook 
Microeconomics

Microeconomics


Edition: 1st
Authors:
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SimplemanSimpleman
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AndrewKraus Author
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#2
6 years ago
Excellent answer, thx
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