Author Question: All normal goods have A) income elasticities of demand greater than 1.0. B) price elasticities ... (Read 114 times)

iveyjurea · **on:** Jun 29, 2018

All normal goods have

A) income elasticities of demand greater than 1.0.
B) price elasticities of demand greater than 1.0.
C) negative price elasticities of demand.
D) positive income elasticities of demand.

Question 2

Dana's utility of wealth is 65 units at 3,000, 80 units at 5,000, and 95 units at 9,000. Starting from zero wealth, he must choose between options A and B. Option A gives him 5,000 for sure.

Option B gives him 3,000 with probability 0.5 or 9,000 with probability 0.5. Dana will
A) choose option A.
B) choose option B.
C) be indifferent between option A and option B because they have the same risk.
D) be indifferent between option A and option B because they have the same expected utility.