Question
Asked Sep 14, 2019
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Given below are the annual demand for movie tickets for young
adults with differing annual income:
a) Calculate the price elasticity of demand for both income when price increases
from $8 to $10.
b) Calculate the income elasticity of demand if the person earning $20,000
annually has an increase in income to $24,000 for price $12 and price $16.
3
Price
($)
Quantity demanded
(income $20,000)
Quantity demanded
(income $24,000)
8 40 50
10 32 45
12 24 30
14 16 20
16 8 12

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Expert Answer

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Step 1

considering the given table as data, we can find the price elasticity at income A as well as B by using the provided formula. also the formula for income elaticity is given as 

 

 

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qty dd at 20000 income qty dd at 24000 income price В 40 8 50 10 32 45 12 24 30 16 20 14 12 16 8 Дя р Др а Да Income elasticity -Aincome income Price elasticity A

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Step 2

A)then using the above formula, we have 

...
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32-40 8 Price elasticity (when income is 20000) = 10-8 40 -8 8 2 40 -0.8 45-50 8 Price elasticity (when income is 24000) 10-8 50 -5 8 2 50 -0.4

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Business

Economics

Consumer demand theory

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