1. A worker receives a 25% raise. As a result, he decides to eat out twice as...
Question:
1. A worker receives a 25% raise. As a result, he decides to eat out twice as much as before and cut back on the number of frozen lasagna dinners from once a week to once every other week. Determine the income elasticity of demand for eating out and for having frozen lasagna dinners. Show all your work.
2. Suppose that a new $50 tax is placed on each cell phone. From the information in the graph below, compute the incidence of tax. How much tax revenue is collected by the government?
3. Imagine that the community you live in decides to enact a rent control of $900 per month on every one-bedroom apartment. Using the following table, determine the market price and equilibrium quantity without rent control. How many one-bedroom apartments will be rented after the rent-control law is passed? Draw a demand supply diagram and show the effect of rent control.
Business Statistics A First Course
ISBN: 978-0321979018
7th edition
Authors: David M. Levine, Kathryn A. Szabat, David F. Stephan