Scenario 5-1 Suppose That When the Average College Student's Income Is $10,000

question 136

Multiple Choice

Scenario 5-1
Suppose that when the average college student's income is $10,000 per year,the annual quantity demanded of Patty's Pizza is 50 and the annual quantity demanded of Sue's Subs is 80.Suppose that when the price of Patty's Pizza increases from $8 to $10 per pie,the quantity demanded of Sue's Subs increases from 80 to 100.Suppose also that when the average student's income increases to $12,000 per year,the annual quantity demanded of Patty's Pizza increases from 50 to 60.
-Refer to Scenario 5-1.Using the midpoint method,what is the income elasticity of demand for pizza and what does the value indicate about the demand for pizza?

• A)The income elasticity is 0.18 so pizza is a normal good.
• B)The income elasticity is -1 so pizza is an inferior good.
• C)The income elasticity is 1 so pizza is unitary elastic.
• D)The income elasticity is 1 so pizza is a normal good.

Understand the concept of cross-price elasticity of demand and how it influences consumer choices.

Comprehend the impact of income changes on demand elasticity for different products.

Interpret the significance of income elasticity of demand for various goods.

Evaluate how marketing strategies can affect the elasticity of demand for products.

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Definitions:

Auditory Route

A pathway in the brain that processes auditory information from the ears to the auditory cortex.

Cochlear Nucleus

An auditory brainstem structure where the cochlear nerve fibers synapse, playing a pivotal role in initial sound processing.

Medial Geniculate

Part of the thalamus involved in the auditory pathway, acting as a relay station for sound information to the auditory cortex.

Primary Auditory Cortex

The region of the brain responsible for processing auditory information, located in the temporal lobe.