Suppose that the price elasticity of demand for a product is ?1 and that the price elasticity of supply is +1 . Assume also that the income elasticity of demand is +2 . Then an increase in income of 10% will raise equilibrium price by
a. 10%.
b. 5%.
c. 20%.
d. an annual amount that cannot be determined.
a
Economics
You might also like to view...
What does the term "increasing marginal opportunity cost" mean? How are increasing marginal opportunity costs represented on a bowed out production possibilities frontier?
What will be an ideal response?
Economics
Why don't people take into consideration the external costs of their actions and reduce the amount of externalities?
What will be an ideal response?
Economics