Question:
Using the "arc formula" and the data from the table below, compute where possible the own- price and income elasticities of demand. (remember that these elasticities are computed holding all other variables constant).
Price quantity price of related goods income
$10 600 $20 $ 16,000
$10 600 $30 $22,000
$12 500 $30 $22,000
$10 500 $20 $22,000
A. Compute owner price elasticity of demand?
B. Demand is -------- (elastic, inelastic, Unitary elastic)?
C. The cross price elasticity of demand= ------- ?
d. The related good is a------- ?
E. The income elasticity =------- /
F. The good is a ...... good?