Suppose that your demand schedule for DVDs is as follows: Quantity Demanded Price Quantity Demanded (income-$10 000) (income $12 000) $8 40 50 $10 45 32 $12 24 30 $14 16 20 $16 8 12 Use the midpoint method to calculate your price elasticity of demand as the price of DVDS increases from $8 to $10 if () your income is $10 000, and () your income is $12 000 4 Calculate your income elasticity of demand as your income increases from $10 000 to $12 000 it the price is $12 In relation to question b, is DVDa normal good or an inferior good. Why?

Suppose that your demand schedule for DVDs is as follows: Quantity Demanded Price Quantity Demanded (income-$10 000) (income $12 000) $8 40 50 $10 45 32 $12 24 30 $14 16 20 $16 8 12 Use the midpoint method to calculate your price elasticity of demand as the price of DVDS increases from $8 to $10 if () your income is $10 000, and () your income is $12 000 4 Calculate your income elasticity of demand as your income increases from $10 000 to $12 000 it the price is $12 In relation to question b, is DVDa normal good or an inferior good. Why?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 7PA: Suppose that your demand schedule for pizza is as follows: a. Use the midpoint method to calculate...

See similar textbooks

Similar questions

What is the formula for line cross-price elasticity of demand?
(Other Elasticity Measures) Complete each of the following sentences: a. The income elasticity of demand measures, for a given price, the __________ in quantity demanded divided by the __________ income from which it resulted. b. If a decrease in the price of one good causes a decrease in demand for another good, the two goods are __________. c. If the value of the cross-price elasticity of demand between two goods is approximately zero, they are considered __________.
The Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decayfigh ter, reduced the price of its electric toothbrush from $35 to $30. As a result, Stopde cays sales declined by 1,500 units per month. What is the arc cross elasticity of demand between Stopdecays toothbrush and Decayfighters toothbrush? What does this indicate about the relationship between the two products? If Stopdecay knows that the arc price elasticity of demand for its toothbrush is 1.5, what price would Stopdecay have to charge to sell the same number of units as it did before the Decayfighter price cut? Assume that Decayfighter holds the price of its toothbrush constant at $30. What is Stopdecays average monthly total revenue from the sale of electric toothbrushes before and after the price change determined in part (b)? Is the result in part (c) necessarily desirable? What other factors would have to be taken into consideration?
Isabella always spends $50 on red roses each month and simply adjusts the quantity she purchases as the price changes. What can you say about Isabella's elasticity of demand for roses?
What is the formula for the income elasticity of demand?
If the elasticity of demand for hamburgers equals 21.5 and the quantity demanded equals 40,000, predict what will happen to the quantity demanded of hamburgers when the price increases by 10 percent. If the price falls by 5 percent, what will happen?
The price elasticity of the demand for gasoline is -0.02. The price elasticity of demand for gasoline at Joe’s 66 station is -1.2. Explain what might account for the different elasticities.