This topic contains a solution. Click here to go to the answer

Author Question: Sylvia allocates her monthly income between Food and Housing. Her budget share spent on food in a ... (Read 243 times)

sam.t96

  • Hero Member
  • *****
  • Posts: 570
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
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
Excellent


ttt030911

  • Member
  • Posts: 315
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

Did you know?

The Babylonians wrote numbers in a system that used 60 as the base value rather than the number 10. They did not have a symbol for "zero."

Did you know?

Increased intake of vitamin D has been shown to reduce fractures up to 25% in older people.

Did you know?

The immune system needs 9.5 hours of sleep in total darkness to recharge completely.

Did you know?

More than 30% of American adults, and about 12% of children utilize health care approaches that were developed outside of conventional medicine.

Did you know?

Approximately 15–25% of recognized pregnancies end in miscarriage. However, many miscarriages often occur before a woman even knows she is pregnant.

For a complete list of videos, visit our video library