Answer to Question #298937 in Microeconomics for Bright

Question

Air conditioners are a luxury good. a) What does this imply about income elasticity? b) Which two countries would you guess have the highest per capita demand for air conditioners at present? c) If people continue to get richer and global warming continues to increase, what is likely to happen to the quantity of air conditioners demanded? d) And what will this do to global warming? And hence to the demand for air conditioners

Answer 1

Answers.

a)Income elasticity of demand measures the responsiveness of demand for a particular good to changes in consumer income. The higher the income elasticity of demand for a particular good, the more demand for that good is tied to fluctuations in consumer's income.

b)The two countries with highest per capita demand could be China and Russia.

c)The potential future effects of global climate change include more demand for air conditioners, longer periods of drought in some regions and an increase in the number, duration and intensity of tropical storms.

d) The expected results is that there will be a considerable increase in global warming.