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Suppose that the quantity demanded of gultas rises by 15% when income rises by 10%
Suppose that the quantity demanded of gultas rises by 15% when income rises by 10%. What is the income elasticity of demand for guitars? Round your answer to the nearest hundredth. Your answer may be a positive or negative number
The table shows the price and quantity demanded for floor mats. Using the Midpoint Method, what is the price elasticity of demand between points 8 and C? Note: Remember to take the absolute value of the result Points Price Quantity 1 7 4 3 12 1
Expert Solution
Q1: Income elasticity of demand = % change in quantity demanded / % change in inocme
= 15% / 10%
= 1.5
Q2: Price elasticity of demand using mid-point = (change in quantity / average quantity) / (change in price / average price)
= ((1-3)/((1+3)/2)) / ((12-4)/((12+4)/2)
= (-2/2) / (8/8)
= -1
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