  WbGG+dchrome-extension://bpmcpldpdmajfigpchkicefoigmkfalc/views/ap.GfOffice Editing for Docs, Sheets & SlidesSuppose that when you get a better paying job (1) (1).docxWDownloadShareFileEditFormatToolsHelpA AB I UList Paragra...Calibri1)Suppose that when you get a better paying job, and you make \$60k now which is a \$20k raisefrom your old job. You purchase less of the breakfast cereal you had been eating before.Previously, you purchased 24 boxes a year, and now you purchase 6boxeshare Albyeara)Calculate the elasticity that you have enough information here to calculate:b)What type of elasticity did you compute?c)What does the number you calculated mean?2)The price of widgets has gone from 2.00 to 5.00 in six months, while the quantity purchased ofwatzits has gone from 4.2 million to 3.2 million.a)Calculate the elasticity that you have enough information here to calculate:b)What type of elasticity did you compute?c) What does the number you calculated mean?3)Billy Joe is calculating an elasticity. When the price was 12 the quantity was 26 and when theprice was 10 the quantity was 16a)Calculate the elasticity that you have enough information here to calculate:b)What type of elasticity did you compute?c) What does the number you calculated mean?3:20r

Question

thank you help_outlineImage TranscriptioncloseW b G G + d chrome-extension://bpmcpldpdmajfigpchkicefoigmkfalc/views/ap. G f Office Editing for Docs, Sheets & Slides Suppose that when you get a better paying job (1) (1).docx W Download Share File Edit Format Tools Help A A B I U List Paragra... Calibri 1) Suppose that when you get a better paying job, and you make \$60k now which is a \$20k raise from your old job. You purchase less of the breakfast cereal you had been eating before. Previously, you purchased 24 boxes a year, and now you purchase 6boxes hare Alb year a) Calculate the elasticity that you have enough information here to calculate: b) What type of elasticity did you compute? c) What does the number you calculated mean? 2) The price of widgets has gone from 2.00 to 5.00 in six months, while the quantity purchased of watzits has gone from 4.2 million to 3.2 million. a) Calculate the elasticity that you have enough information here to calculate: b) What type of elasticity did you compute? c) What does the number you calculated mean? 3) Billy Joe is calculating an elasticity. When the price was 12 the quantity was 26 and when the price was 10 the quantity was 16 a) Calculate the elasticity that you have enough information here to calculate: b) What type of elasticity did you compute? c) What does the number you calculated mean? 3:20 r fullscreen
Step 1

Here, it given that, Y1 = \$40 K, Y2 = \$60 K, Q1 = 24 boxes, and Q2 = 6 boxes

where Y1, Y2 depicts the different incomes of consumer and Q1, Q2 depicts the different quantity demanded by consumers.

From this given information, it is easy to calculate the income elasticity of demand which measures the sensitivity of the quantity demanded for a good when the income of consumers changes (in percentage term).

a) Income elasticity of demand = Percentage (%) change in Quantity demanded / Percentage (%) change in income

Percentage (%) change in Quantity demanded = Q2 – Q1/ Q1 * 100

= 6-24/24 * 100

= -18/24 * 100

=- 75%

Percentage (%) change in income = Y2 – Y1/Y1 *100

= \$60 K - \$40K/ \$40 K * 100

= \$20 k / \$40 K * 100

= 50%

Now, substitute the above calculated value in the income elasticity of demand equation, i.e.,

Income elasticity of demand = -75%/50%

= - 1.5

b) Thus, here we have estimated the income elasticity of demand.

c) The income elasticity of demand is – 1.5 which means the given good is an inferior good.

Step 2

Here, it given that, P1 = \$2 K, P2 = \$5, Q1 = 4.2 million, and Q2 = 3.2 million

where P1, P2 depicts the different prices paid by consumer and Q1, Q2 depicts the different quantity demanded by consumers.

From this given information, it is easy to calculate the price elasticity of demand which measures the sensitivity of the quantity demanded for a good when the price of goods changes (in percentage term).

a) Price elasticity of demand = Percentage (%) change in Quantity demanded / Percentage (%) change in price

Percentage (%) change in Quantity demanded = Q2 – Q1/ Q1 * 100

= 4.2 million – 3.2 million / 4.2 million * 100

= 1 million/4.2 million * 100

&n...

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