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alexgriva
2 months ago
6

A 10 percent increase in income leads to a 15% decrease in the quantity of macaroni and cheese demanded but no change in the pri

ce of macaroni and cheese. From this information, we can assume:
(a) macaroni is a normal good and price elasticity of demand is greater than 1.
(b) macaroni is an inferior good and price elasticity of supply is equal to zero.
(c) macaroni is an inferior good and price elasticity of supply is infinite.
(d) macaroni is an inferior good and price elasticity of demand is less than 1.
Business
1 answer:
marusya05 [3.7K]2 months ago
4 0

Answer:

(b) macaroni is categorized as an inferior good, and the price elasticity of supply is zero.

Explanation:

An increase in income by 10 percent results in a 15% reduction in the demand for macaroni and cheese without any change in price. This suggests that macaroni is indeed an inferior good with zero price elasticity of supply.

Inferior goods experience lower demand as incomes rise, supported by the observation that ‘’A 10 percent increase in income leads to a 15% decrease in the quantity of macaroni demanded’’.

In terms of price elasticity of supply, a value of zero indicates that the supply amount remains unchanged regardless of price fluctuations: the supply is "fixed". The original scenario states there was ''no change in the price of macaroni,'' indicating that the elasticity of supply in this situation is zero.

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