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- Sally Henin has a price elasticity of demand for gasoline of -0.8. Her income elasticity for gasoline is 0.5. Sally's current income is $40,000 per year. Sally currently spends $800 per year on gasoline. The price of gasoline is currently $1.00 per gallon. a. A contemplated excise tax on gasoline will cause the price of gasoline to rise to $1.40. What impact will the tax have on Sally's consumption of gasoline? b. Since the purpose of the tax is only to discourage gasoline consumption, Congress is considering a $200 income tax rebate to lessen the burden of the gasoline tax. What impact will the rebates have on Sally's consumption of gasoline? c. Assume that both the tax and rebate are implemented. Will Sally be worse off or better off?Suppose that Felicia gets a tax rebate of $2,500 to ease the effect of the sales tax. What would her consumption of food be now? (Again, use an arc income elasticity to answer this question instead of a point income elasticity.) Felicia's consumption of food would now be nothing unitsHi may explain to me how to solve the question step by step? TQ Sally Henin has a price elasticity of demand for gasoline of -0.8. Her income elasticity for gasoline is 0.5. Sally's current income is $40,000 per year. Sally currently spends $800 per year on gasoline. The price of gasoline is currently $1.00 per gallon. a. A contemplated excise tax on gasoline will cause the price of gasoline to rise to $1.40. What impact will the tax have on Sally's consumption of gasoline? b. Since the purpose of the tax is only to discourage gasoline consumption, Congress is considering a $200 income tax rebate to lessen the burden of the gasoline tax. What impact will the rebates have on Sally's consumption of gasoline? 3. Assume that both the tax and rebate are implemented. Will Sally be worse off or better off?
- If the price of petrol increases from 70 cents to 77 cents per litre, and as a resultthe quantity demanded decreases from 1000 to 995 litres, calculate the priceelasticity of demand. 2. If the original price and quantity demand are $0.50 and 50 respectively, andthere is an increase in price to $0.55, and quantity demanded falls to 10,calculate the price elasticity of demand. 3. An individual has allocated income so as to maximise total utility and hasmarginal utility of coffee (per cup per week) that is four times that of tea (percup per week) but only a quarter of that of pepperoni pizza. If a pepperonipizza is $16, You are required to calculatea) Price of coffee per cup. b) Price of tea per cup.Nadia consumes two goods, food and clothing. The price of food is $2, the price of clothing is $5, andher income is $1,000. Nadia always spends 40 percent of her income on food regardless of the price offood, the price of clothing, or her income.a. What is her price elasticity of demand for food?b. What is her cross-price elasticity of demand for food with respect to the price of clothing?c. What is her income elasticity of demand for food?Income effects depend on the income elasticity ofdemand for each good that you buy. If one of the goodsyou buy has a negative income elasticity, that is, it is aninferior good, what must be true of the income elasticityof the other good you buy?
- Sally Henin has a price elasticity of demand for gasoline of -0.8. Her income elasticity for gasoline is 0.5. Sally's current income is $40,000 per year. Sally currently spends $800 per year on gasoline. The price of gasoline is currently $1.00 per gallon. A contemplated excise tax on gasoline will cause the price of gasoline to rise to $1.40. What impact will the tax have on Sally's consumption of gasoline? Since the purpose of the tax is only to discourage gasoline consumption, Congress is considering a $200 income tax rebate to lessen the burden of the gasoline tax. What impact will the rebates have on Sally's consumption of gasoline? Assume that both the tax and rebate are implemented. Will Sally be worse off or better off?Nadia consumes two goods, food and clothing. The price of food is $2,the price of clothing is $5,and her income is $1,000. Nadia always spends 40 percent of her income on food regardless of the price of food, the price of clothing, or her income. 1. What is her price elasticity of demand for food? 2. What is her cross-price elasticity of demand for good with respect to the price of clothing?Becky only eats out at Macaroni Grill, and she eats out three times per month. She receives a raise from $31,900 per year to $33,500 per year and decides to eat out five times per month. Use the midpoint method to calculate the monthly income elasticity of demand for eating out. Round your answer to two decimal places. This good is units O a normal good and income-inelastic. a normal good and income-elastic. O an inferior good.
- Suppose the income elasticity of demand for food is 0.45 and the price elasticity of demand is 1.00. Suppose also that Felicia spends $10,000 a year on food, the price of food is $2, and that her income is $ 25,000. If a sales tax on food caused the price of food to increase to $2.50, what would happen to her consumption of food? Because a large price change is involved, use the arc elasticity to measure the price elasticity of demand rather than a point elasticity. Felicia's consumption of food would decrease by units. ( Enter your response rounded to two decimal places.) Suppose that Felicia gets a tax rebate of $2,500 to ease the effect of the sales tax. What would her consumption of food be now? (Again, use an arc income elasticity to answer this question instead of a point income elasticity.) Felicia's consumption of food would now be 4,175.18 units. (Enter your response rounded to two decimal places.) Is she better or worse off when given a rebate equal to the sales tax payments?…Nadia consumes two goods, food and clothing. The price of food is $2,the price of clothing is $5,and her income is $1,000. Nadia always spends 40 percent of her income on food regardless of the price of food, the price of clothing, or her income.What is her price elasticity of demand for food?Yesterday, the price of envelopes was $3 a box, and Julie was willing to buy 10 boxes. Today, the price has gone up to $3.75 a box, and Julie is now willing to buy 8 boxes. Is Julie's demand for envelopes elastic or inelastic? What is Julie's elasticity of demand? To find Julie's elasticity of demand, we need to divide the percent change in quantity by the percent change in price.