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Author Question: When your budget line is just tangent to your indifference curve, you are at your best affordable ... (Read 106 times)

Chelseaamend

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on: Jun 29, 2018
When your budget line is just tangent to your indifference curve, you are at your best affordable point.
 
  Indicate whether the statement is true or false

Question 2

Suppose that the price elasticity of demand for snow shovels is 1.2 . What would have to happen to the price of a snow shovel for the quantity demanded to fall from 2,000 to 1,800? Use the midpoint formula in your calculations.
 
  What will be an ideal response?


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Madisongo23

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Reply #1 on: Jun 29, 2018
Answer to Question 1

TRUE

Answer to Question 2

percentage change in quantity demanded = 1,800  2,000/1,900 = -200/1,900
= -10.5.
-10.5/percentage change in price = -1.2

Therefore, the price of snow shovels must rise by 8.75 percent.


Chelseaamend

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Reply 2 on: Jun 29, 2018
Thanks for the timely response, appreciate it

epscape

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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