What is the income elasticity of demand

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Reference no: EM131300867

Please discuss the following questions using concepts and knowledges you learned from this course. The word limit is 1500 in total for these four questions.

1. What is the income elasticity of demand? How can it be used to determine whether a good is a normal good or an inferior good? What is the cross-price elasticity of demand? How can it be used to determine whether two goods are substitutes or complements?

2. In what way does the notion of comparative advantage help to explain that production possibilities curves are bowed outward (the principle of increasing opportunity cost)? Explain your answer in the context of the trade-off between drainpipes and butter.

3. Explain how the long-run market supply curve for a perfectly competitive industry depends on factor prices.

4. How are price ceilings similar to taxes on producers? How are price floors similar to taxes on consumers? How are both price ceilings and price floors different from taxes?

Reference no: EM131300867

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Students are required to cover all stated requirements. 2. Your answer must be both uploaded to Moodle in word file and handed over a printed copy. 3. You need to support your answers with appropriate Harvard style references where necessary. 4. Only include information in your appendixes that has been directly referred to in the body of your document. 5. Include a title/cover page containing the subject title and code and the name, student id numbers.

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