« previous next »

Author Question: Used car buyers believe a car is good quality when the seller signals the car's quality by offering ... (Read 178 times)

james

  • Hero Member
  • *****
  • Posts: 573
on: Jun 29, 2018
Used car buyers believe a car is good quality when the seller signals the car's quality by offering a warranty because
 
  A) car sellers would never lie.
  B) car buyers are gullible.
  C) the signal cannot be false.
  D) a false signal can be costly to the seller.

Question 2

Jenny's weekly income increases from 500 to 650. As a result, she goes out for dinner one day a week instead of one day every other week. What is Jenny's income elasticity of demand for restaurant dinners?
 
  What will be an ideal response?


canderson530

  • Sr. Member
  • ****
  • Posts: 317
Reply #1 on: Jun 29, 2018
Answer to Question 1

D

Answer to Question 2

The income elasticity of demand = (percentage change in the quantity demanded)  (percentage change in income). Using the midpoint method to calculate the percentages, the percentage change in the quantity of meals demanded = (1.0 - 0.5 )  (0.75 )  100 = 66.67 percent and the percentage change in income (650 - 500 )  (575 )  100 = 26.1 percent. Therefore the income elasticity of demand equals (66.67 percent)  (26.1 percent) = 2.56.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Only one in 10 cancer deaths is caused by the primary tumor. The vast majority of cancer mortality is caused by cells breaking away from the main tumor and metastasizing to other parts of the body, such as the brain, bones, or liver.

Did you know?

Congestive heart failure is a serious disorder that carries a reduced life expectancy. Heart failure is usually a chronic illness, and it may worsen with infection or other physical stressors.

Did you know?

The ratio of hydrogen atoms to oxygen in water (H2O) is 2:1.

Did you know?

Excessive alcohol use costs the country approximately $235 billion every year.

Did you know?

Green tea is able to stop the scent of garlic or onion from causing bad breath.

Electroencephalography (EEG). To perform the EEG, electrodes attached to the patient’s head pick up Electroencephalography (EEG). To perform the EEG, electrodes attached to the patient’s head pick up
Jeremy Deller, A Good Day for Cyclists (painted by Sarah Tynan). Jeremy Deller, A Good Day for Cyclists (painted by Sarah Tynan).
The excitatory and inhibitory signals that directly influence the activity of a motor neuron. The excitatory and inhibitory signals that directly influence the activity of a motor neuron.
Good body mechanics for sitting on chair while performing massage. A. Sit with back and head in ... Good body mechanics for sitting on chair while performing massage. A. Sit with back and head in ...
Potatoes are a good source of complex carbohydrates Potatoes are a good source of complex carbohydrates
Peanut butter is good source of protein Peanut butter is good source of protein
Video: Leukemia

For a complete list of videos, visit our video library