Meals in a zip about an economic theory

Assignment Help Business Economics
Reference no: EM131197550

You explain to your friend Haslina, who runs a catering service called "Meals in a Zip," about an economic theory which asserts that consumers will purchase less of a product at higher prices than they will at lower prices. She contends that the theory is incorrect because over the past two years she has raised the price of her catered meals and yet has seen a brisk increase in sales. How would you respond to Haslina?

A) Haslina is right; she has evidence to back her claim. The theory must be erroneous.

B) I will explain to her that she is making the error of reverse causality: it is the increase in demand that has enabled her to raise her prices.

C) I will explain to her that there are some omitted variables that have contributed to an increase in her sales such as changes in income.

D) Haslina is making the mistake of assuming that correlation implies causation.

Reference no: EM131197550

Questions Cloud

Assuming that the market is in equillibrium : Thames Inc.'s most recent dividend was $2.75 per share (i.e., D0 = $2.75). The dividend is expected to grow at a rate of 3% per year. The risk-free rate is 6% and the equity market risk premium is 5%. The company's beta is 1.3. Calculate the price of..
Calculate nominal gdp in each year : In year 1 and year 2, there are two products produced in a given economy, cars and beef. Suppose that there are no intermediate goods. In year one, 200 cars are produced and sold at $15,000 each, and in year two, 250 cars are sold at $16,000 each. Ca..
Corruption perceptions index : Transparency International's Corruption Perceptions Index (CPI) is a comparative assessment of a country's integrity performance. Provide a brief analysis (not a description) of this index and its ranking using concepts from the readings and lectures..
Describe an example of time when you behaved as free rider : Describe an example of a time when you behaved as a “free rider.” Explain how your behavior may have been different had you had to pay for the good/service involved. Also describe how your specific free rider example could have been rectified.Ec
Meals in a zip about an economic theory : You explain to your friend Haslina, who runs a catering service called "Meals in a Zip," about an economic theory which asserts that consumers will purchase less of a product at higher prices than they will at lower prices. She contends that the theo..
The market price of pizza in college town decreased recently : The market price of pizza in College Town decreased recently. Some students in an economics class suggest that the price fell because several new pizza parlors opened for business in the area. the graph right now looks like the supply and demand curv..
Social-political and cultural influences : Many people within a country may recognize how social, political, and cultural influences have an impact upon them. At the same time, social, political, and cultural influences may be such a part of daily life that they seem merely “the way things ar..
The decrease in the price of hamburgers : The market price of pizza in College Town decreased recently. Some students in an economics class suggest that the price fell because several new pizza parlors opened for business in the area. If the equilibrium quantity of pizza increased, then the ..

Reviews

Write a Review

Business Economics Questions & Answers

  The inframarginal impact of the tax break

Suppose there are two people in a society that has a 50% income tax. Both people have pretax incomes of $40,000. In period 1, there was no tax deduction; Lillian gave $6,000 to charity, and Susie gave $4,000 to charity. What is the amount Susie must ..

  In situation of fixed exchange rate

In a situation of a fixed exchange rate, explain why, in the monetary approach, an excess supply of money leads to a balance-of-payments deficit. Why is the deficit only temporary? How might advocates of the monetary approach explain a long-lasting d..

  European countries experience an economic expansion

All European countries experience an economic expansion, raising incomes in each of the European countries. The government decides to decrease the amount it spends on the military.

  An economists viewpoint to minimize role of the government

Is it reasonable from an economist's viewpoint to minimize the role of the government in accordance with Nozick's moral argument.

  What is the equilibrium quantity of bicycles

Suppose we have the following market supply and demand schedules for bicycles: Price Quantity Demanded Quantity Supplied $100 70 30 $200 60 40 $300 50 50 $400 40 60 $500 30 70 $600 20 80. Plot the supply curve and the demand curve for bicycles. What ..

  Define the quantity of money theory

Define the Quantity of Money theory and identify whether this is a Keynesian or Classical cornerstone. Describe what happens when, according to this theory, the money supply is increased.

  What will be the implications of this on crime rates

Describe a Pigovian taxes. If Pigovian taxes are imposed in the presence of negative externalities then does this create a deadweight loss? Describe a real-world situation where a Pigovian tax will be applicable. Show using a diagram. What might be t..

  Use unemployment formulas and okuns law

In 2014 in a country with a labor force of 100 million, 6 million people were unemployed. In 2014 the number of unemployed people increased to 7.750 million. Assuming that the labor force did not increase in 2014, use the Okun’s law and formula predi..

  What is the expected rate of return on his investment

Gavin Jones’s friend is planning to invest $1 million in a rock concert to be held 1 year from now. The friend figures that he will obtain $3 million revenue from his $1 million investment - unless, my goodness, it rains. What is the expected rate of..

  Major reasons for government involvement in a market economy

Explain why government regulation is or is not needed, citing the major reasons for government involvement in a market economy. Provide support for your explanation.

  What is the outcome of the case

What is the outcome of the case and whether you agree with the final decision and why?

  Consumers income increases

Assume we are examining the market for luxury automobile in the USA. In separate graphs, graph what occurs when each of the following happens For each graph explain what is happening and why. Consumer’s income increases.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd