Question

After Joyce and Larry purchased their first house, they made additional home improvements in response to increases in income. After a while, their income rose so much that they could afford a larger home. Once they realized they would be moving, they reduced the amount of home improvements. Their Engel curve for home improvements on their current home is_________.
A) thin downward slopping curves that never cross.
B) flat.
C) positively sloped.
D) backward bending.
E) Thick.

Answer 1

Answer:

The correct answer is letter "D": backward bending.

Explanation:

Named after German statistics Ernst Engel (1821-1896), the Engel curve portraits the relationship between the amount of food households buy as long as their income increase. Engels stated that the more the household increase is the minor the amount of food will represent of the income- Households with low income, instead, will spend more if the income in food.

Plotted in a graph, in the case of inferior goods -those that decrease in consumption as the household income increases, its curve is backward bending meaning less of the good is being acquired as the household receives more money.

Thus, home improvements will represent an inferior good for Joyce and Larry as long as their income keeps rising. The Engel curve for Joyce and Larry home improvements will be backward bending.

Answer 2

Answer:D) backward bending.

Explanation: Engel Curve is a curve developed based on the study on households expenditures and income by a German Statistical expert named Ernst Engel in the year 1857.

An Engel curve shows the relationship between demand for a good (on the horizontal or x-axis) and income level (on the vertical or y-axis). A normal good has a positive slope of curve is Positive,but if the slope of the curve is negative, the good is an inferior good.

THE CURVE FOR JOYCE AND LARRY AFTER THEY REDUCED THEIR HOME IMPROVEMENT SPENDING WILL HAVE A BACKWARD BENDING.