intermediate economics

Intermediate Microeconomic Theory (ECON 021)

HOMEWORK 2

Answers must be as detailed as possible

1. In your own words, explain the income-consumption curve and income elasticity using graph 1.

Graph 1

2. Draw a demand curve for music downloads. What happens to it in each of

the following scenarios? Why?

a. The price of iPods falls

b. The price of music downloads falls

c. The price of CDs falls