Define and explain the three key economic ideas: 1) people are rational; 2) people respond to economic incentives; 3) optimal decisions are made at the margin. Provide an example for each idea (Do not use the examples from the textbook).
Using the economics or other literature (but not the textbook) to identify estimates of the income elasticity of demand for at least three different products. Provide full citations for the employed literature. Comment on the magnitudes of these estimates in relation to the standard economic determinants of the income elasticity of demand.Rationale
The question addresses the following learning outcomes:
• be able to apply demand and supply analysis to make a range of market related decisions
• be able to make decisions that incorporate the relevant benefits and cost analysis.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.