Consumer Spending and Income Elasticity
Joel Waldfogel talked about his book Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays (Princeton University Press; October 25, 2009). In his book he argues that Americans end up wasting billions of dollars on presents during the holiday season every year. He says that consumers are spending a smaller share of their income on holiday shopping than in previous decades.
Description
Joel Waldfogel talked about his book Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays (Princeton University Press; October 25, 2009). In his book he argues that Americans end up wasting billions of dollars on presents during the holiday season every year. He says that consumers are spending a smaller share of their income on holiday shopping than in previous decades.
Bell Ringer Assignment
- In the last 70 years, gross domestic product in the United States has gone up five times. Over the same period, how much has Christmas spending risen?
- Professor Joel Waldfogel lists three goods: spam, chicken, and caviar. What economic classification does he give to each of these goods?
- He then classifies these goods using a numerical value related to their income elasticity of demand. What are the numerical values assigned to an inferior good, normal good, and luxury good.
- AP MICROECONOMICS FRQ PRACTICE: Write out the mathematical equations for each of the following: elasticity of demand, income elasticity of demand, cross-price elasticity of demand, and elasticity of supply. If a good has a negative cross-price elasticity of demand, identify if the good is a complementary good, substitute good or an unrelated good. Explain.
Additional Resources
Participants
Vocabulary
- Expenditure
- Gross Domestic Product
- Income Elasticity
- Inferior Good
- Luxury Good
- Normal Good