Question

A 10 percent increase in income leads to a 15% decrease in the quantity of macaroni and cheese demanded but no change in the price of macaroni and cheese. From this information, we can assume: A 10 percent increase in income leads to a 15% decrease in the quantity of macaroni and cheese demanded but no change in the price 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.

Answer 1

Answer:

macaroni is an inferior good and price elasticity of supply is infinite.

Explanation:

An inferior good is a good whose demand increases when income falls and falls when income increases.

A normal good is a good whose demand increases when income rises and decreases when income falls.

Price elasticity of supply measures the responsiveness of quantity supplied to changes in price.

Price elasticity of supply = percentage change in quantity supplied / percentage change price

Percentage change in quantity supplied = not given

Percentage change in price = 0 (because the question states that there was no change in price)

Any figure divided by zero gives infinity.

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