James buys 10 boxes of Ramen noodles per month when his income is $500 and 3 boxes per month when his income is $1,000 per month.

James buys 10 boxes of Ramen noodles per month when his income is $500 and 3 boxes per month when his income is $1,000 per month. Calculate James’ income elasticity for Ramen when his income is $500. Based on your answer, is Ramen a normal or inferior good for him? 1012)

 9. [4] Geraldine spends $300 on jewelry annually when her income is $30,000 per year and $600 on jewelry when her income rises to $45,000 per year and the price of jewelry remains unchanged. Calculate Geraldine’s income elasticity for jewelry when her income is $30,000. Based on your answer, is jewelry a necessity or luxury for Geraldine?

10. [3] Suppose that we observe a pet store offering a promotion to give away goldfish, which they normally sell for $8 each. Could such a promotion possibly increase the store’s revenue? Explain

11. [6] Suppose that market demand for beach towels in Destin is Q= 500 – 50*P per week. At what price and quantity will consumer spending on towels be maximized, and what is this maximized expenditure per week?

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