This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Sylvia allocates her monthly income between Food and Housing. Her budget share spent on food in a ... (Read 225 times)

sam.t96

  • Hero Member
  • *****
  • Posts: 570
on: Jul 1, 2018
Sylvia allocates her monthly income between Food and Housing. Her budget share spent on food in a given month is always 30, and for Sylvia, food is a necessity (income elasticity between zero and one).
 
  Derive the maximum and minimum values for the income elasticity of demand for housing.

Question 2

A market is in equilibrium when
 
  A) supply is equal to demand.
  B) the price is adjusting upward.
  C) the quantity supplied is equal to the quantity demanded.
  D) tastes and preference remain constant.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

macybarnes

  • Sr. Member
  • ****
  • Posts: 312
Reply #1 on: Jul 1, 2018
Answer to Question 1

The weighted (by budget share) sum of income elasticities will sum to one. Thus to derive bounds for income elasticity of housing, we use the following equation:
.3F + .7H = 1
Rearrange this equation:
H = (1 - .3F)/.7
We are told that food is a necessity (0 < F < 1 ) which tells us the range of H:
minimum H = 1
maximum H = 1.43

Answer to Question 2

C


sam.t96

  • Member
  • Posts: 570
Reply 2 on: Jul 1, 2018
YES! Correct, THANKS for helping me on my review

ghepp

  • Member
  • Posts: 361
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

Bacteria have flourished on the earth for over three billion years. They were the first life forms on the planet.

Did you know?

Studies show that systolic blood pressure can be significantly lowered by taking statins. In fact, the higher the patient's baseline blood pressure, the greater the effect of statins on his or her blood pressure.

Did you know?

If all the neurons in the human body were lined up, they would stretch more than 600 miles.

Did you know?

Patients who have undergone chemotherapy for the treatment of cancer often complain of a lack of mental focus; memory loss; and a general diminution in abilities such as multitasking, attention span, and general mental agility.

Did you know?

All adverse reactions are commonly charted in red ink in the patient's record and usually are noted on the front of the chart. Failure to follow correct documentation procedures may result in malpractice lawsuits.

A marine food web in action: feeding baleen whales and birds. A marine food web in action: feeding baleen whales and birds.
The Pleiades, an open cluster of stars in the constellation of Taurus. These stars share a common mo The Pleiades, an open cluster of stars in the constellation of Taurus. These stars share a common mo
MyPlate has replaced the now outdated Food Pyramid. MyPlate has replaced the now outdated Food Pyramid.
Hormones Regulate Digestion, Enzymes Chemically Digest Food, and Bile Aids in Fat Hormones Regulate Digestion, Enzymes Chemically Digest Food, and Bile Aids in Fat
Closed and Open Food Product Dating Closed and Open Food Product Dating
A phylogenetic tree showing that all non-African human populations share a closer genetic relationsh A phylogenetic tree showing that all non-African human populations share a closer genetic relationsh
Video: Role of the respiratory system - effect of altered ventilation rates

For a complete list of videos, visit our video library