Author Question: Using the above figure, suppose that roses are a normal good. If incomes decrease while ... (Read 114 times)

EY67 · **on:** Jun 29, 2018

Using the above figure, suppose that roses are a normal good. If incomes decrease while simultaneously there is an increase in the price of the resources used to produce roses, then

A) the price will definitely increase above 25 per dozen roses.
B) the quantity will definitely decrease below 10 dozen roses.
C) the price will definitely decrease below 25 per dozen roses.
D) we cannot tell what will happen to equilibrium quantity.

Question 2

Apple, the consumer electronics giant, on Tuesday rolled out new versions of its popular iPod music player. CEO Steve Jobs also unveiled cheaper models of its Touch music player, a touchscreen-only device.

An 8-gigabyte version now costs 230, down from 300. A 32-gigabyte model costs 400, down from 500. Calculate the price elasticity of demand for a 32 gigabyte Touch player if the quantity demanded increases from 850,000 to 950,000 the month after the price decrease. A) 0.5
B) 1.5
C) 1
D) 0.75