Author Question: A consumer spends his income on food and rent. The government places a 1 tax on food. To restore the ... (Read 175 times)

dmcintosh · **on:** Jul 1, 2018

A consumer spends his income on food and rent. The government places a 1 tax on food. To restore the pre-tax consumption level of food the rebate paid to consumers will be smallest when

A) the own price elasticity of demand for food is 2, and the income elasticity of demand for food is 5.
B) the own price elasticity of demand for food is 5, and the income elasticity of demand for food is 5.
C) the own price elasticity of demand for food is 2, and the income elasticity of demand for food is 10.
D) the own price elasticity of demand for food is 5, and the income elasticity of demand for food is 10.

Question 2

Refer to Scenario 7.2. Suppose that you receive an order for 60 earthquake detectors. How much labor will you use to minimize the cost of 60 earthquake detectors?

A) 1
B) 5
C) 10
D) 45
E) none of the above