Suppose the income elasticity of demand for gadgets is 1.2 and the price elasticity of demand for gadgets is -1.0. The price elasticity of supply of gadgets is 2.0. If consumer income increases by 1 percent, by what percent will the equilibrium price of gadgets increase?

Suppose the income elasticity of demand for gadgets is 1.2 and the price elasticity of demand for gadgets is -1.0. The price elasticity of supply of gadgets is 2.0. If consumer income increases by 1 percent, by what percent will the equilibrium price of gadgets increase?

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 2SQP

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Question

Suppose the income elasticity of demand for gadgets is 1.2 and the price elasticity of demand for gadgets is -1.0.
The price elasticity of supply of gadgets is 2.0. If consumer income increases by 1 percent, by what percent will the
equilibrium price of gadgets increase?

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