Difference between revisions of "Economics Homework Three Answers - Student Fifteen"
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Revision as of 14:54, September 24, 2009
IsaacZ
1.A product that has large price elasticity is a computer or game system.
2. Income elasticity is how much the demand would increase when peoples incomes increase.
3.a. horizontal b. vertical
4. "Necessity" is the name given to goods with a price elasticity of less than one because those goods will always be bought. "Luxury" is the name given to goods with a price elasticity over one because if you raise the price not many people will buy them.
5. A substitute for french fries may be fruit or vegetables. A complement of french fries is ketchup.
6. An example of a "normal" good is butter. An example of an "inferior" good is margarine.
7. A price control set below the equilibrium causes a supply shortage because since the price is low the demand increases the supply is unable to meet the demand.