Question

8a. Suppose that Jayce's income as a student is $17,000 per year and that the job offer he receives comes with a salary of $28,000. In the questions below, give all answers to two decimals. If his consumption of ramen noodles falls from 400 packs per year to 30 packs per year, his income elasticity of ramen noodles is and they are a(n) to Jayce. If his consumption of hot dogs increases from 200 per year to 230 per year, his income elasticity of hot dogs is and they are a(n) good to Jayce. In general, it is the of the income elasticity coefficient that indicates if the good is normal or inferior.

8b.

Part 1   (1 point)

See Hint

The market for iced tea is characterized by the following inverse supply and demand functions:

Supply: ?=??−706p=QS−706


Demand: ?=182−??8p=182−QD8 ^,


where ??QS stands for quantity supplied (number of bottles), ??QD stands for quantity demanded (number of bottles), and ?P stands for price (per bottle). The equilibrium quantity in the market for iced tea is     bottles. Round to the nearest whole number.

Part 2   (1 point)

See Hint

The equilibrium price in the market for iced tea is $    per bottle. Round to the nearest whole number.

Answer 1

8a. -3.52; inferior; 0.29; normal

(Income elasticity for ramen noodles =

So, it is inferior.

Income elasticity for hotdogs =

So, it is normal)

8b.

Part 1: 789
(At equilibrium, demand = supply.
So, 182 - Q/8 = Q - 706
So, Q + Q/8 = 182 + 706
So, 9Q/8 = 888
So, Q = 888*(8/9) = 789)

Part 2: 83
(P = Q - 706 = 789 - 706 = 83)