1. Due to the recent downturn in economic activity, Taz has seen his hours at work reduced. He used to work 30 hours a week at $13 an hour, but now he works 22 hours. Due to this change, he noticed he purchased more boxed Macaroni and Cheese, up from 1 box a week to 4. He also reduced his purchase of Coke from 2 12-packs to 1 12-pack per week.
i) What is the income elasticity of macaroni and cheese for Taz?
ii) What type of good is Macaroni and cheese for Taz?
iii) What is the income elasticity of Coke for Taz?
iv) What type of good is Coke for Taz?
2. Syesha loves to eat Sunday breakfast at her local Scrambles restaurant. She usually orders a la carte. Her usual breakfast consists of 2 scrambled eggs, 1 piece of bacon, and 2 links of sausage. The price of an egg, a sausage link, and a piece of bacon are all $1. Thus her breakfast has a price of $5.
Scramble restaurant changes the price of eggs to $1.50. She now orders the following for her breakfast:
1 scrambled egg, 2 pieces of bacon, and 1 sausage link.
i) Calculate the cross-price elasticity of eggs and sausage.
ii) What type of relationship is there between eggs and sausage?
iii) Calculate the cross-price elasticity of eggs and bacon?
iv) What type of relationship is there between eggs and bacon?
1. Due to the recent downturn in economic activity, Taz has seen his hours at work reduced. He used to work 30 hours a week at $13 an hour, but now he works 22 hours. Due to this change, he noticed he purchased more boxed Macaroni and Cheese, up from 1 box a week to 4. He also reduced his purchase of Coke from 2 12-packs to 1 12-pack per week.
i) What is the income elasticity of macaroni and cheese for Taz?
ii) What type of good is Macaroni and cheese for Taz?
iii) What is the income elasticity of Coke for Taz?
iv) What type of good is Coke for Taz?
2. Syesha loves to eat Sunday breakfast at her local Scrambles restaurant. She usually orders a la carte. Her usual breakfast consists of 2 scrambled eggs, 1 piece of bacon, and 2 links of sausage. The price of an egg, a sausage link, and a piece of bacon are all $1. Thus her breakfast has a price of $5.
Scramble restaurant changes the price of eggs to $1.50. She now orders the following for her breakfast:
1 scrambled egg, 2 pieces of bacon, and 1 sausage link.
i) Calculate the cross-price elasticity of eggs and sausage.
ii) What type of relationship is there between eggs and sausage?
iii) Calculate the cross-price elasticity of eggs and bacon?
iv) What type of relationship is there between eggs and bacon?
