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# worker receives a 25% raise As a result he decides to eat out twice as much as before and cut back on the number of frozen lasagna dinners from once a week to once every other week

worker receives a 25% raise. As a result, he decides to eat out twice as much as before and cut back on the number of frozen lasagna dinners from once a week to once every other week. Determine the income elasticity of demand for eating out and for having frozen lasagna dinners. Show all your work.

2. Suppose that a new \$50 tax is placed on each cell phone. From the information in the graph below, compute the incidence of tax. How much tax revenue is collected by the government?

4. What can you conclude about the price elasticity of demand in each of the following statements (that is, whether demand is price elastic or inelastic etc..)? Explain your answer (3 points)

a) The pizza delivery business in this town is very competitive. I d lose half my customers if I raised the price by as little as 10%

b) My economics professor has chosen to use the Mankiw textbook for this class. I have no choice but to buy the book.

c) I always spend a total of exactly \$10 per week on coffee.

Apr 30 2020 View more View Less