A)Classify and Draw the Demand Curves for Two Goods with the Following

question 92

Essay

a)Classify and draw the demand curves for two goods with the following price elasticities of demand:
i)Price elasticity of demand = ∞
ii)Price elasticity of demand = 0
b)Consider two goods: A and B.Good A has many close substitutes,while Good B has only a few.An individual spends an equal amount of his budget on both goods.Given this information,which of the two goods will have a higher price elasticity of demand?
c)Consider two goods: A and B.Both goods have the same number of substitutes,but consumers spend a higher proportion of their income on Good A than on Good B.Given this information,which of the two goods will have a higher price elasticity of demand?

---

Definitions:

Credibility

The quality of being trusted and believed in, often considered in the context of individuals, organizations, or information.

Famous Economist

A renowned expert in the field of economics who has significantly contributed to economic theories, practices, or policies.

Reduce Taxes

A financial strategy aimed at lowering the amount of taxes owed by an individual or organization.

Implicit Associations

Implicit associations are unconscious links or connections between different concepts, feelings, or beliefs that influence an individual's attitude and behavior.