QUESTION 48 1 Pizza is an good if the demand for pizza incre

QUESTION 48 1. Pizza is a(n) good if the demand for pizza increase when your income increases. QUESTION 49 1. When the elasticity of supply is greater than one, it is known as supply

Solution

Pizza is a normal good, if the demand for pizza increases when your income increases. As characteristic of normal good is,when income of a consumer increases, demand for that product increases. When the elasticity of supply is greater than one ,it is known as highly elastic supply. As elasticity greater than one means due to little change in price of the product there will be compartively more change in quantity supplied.Thus quantity is more responsive to price. Jim buys more the higher the price of the good,his behaviour does not follow the law of demand. As law of demand says that as price of a product increases, its demand must reduce. The price of borrowing in the financial market or the rate of return of an investment is known as the interest. As interest divide a payout by a principal amount invested. Rate of return is the payout received when some investment is made. It calculates all gains or losses or costs. While price of borrowing is the payout made when some borrowing is done.