Elasticity! Here are five values for different types of elasticity. (The numbers have been calculated for each case/market using the elasticity methods from your textbook.) Assume that prices rose by 10% in the calculations for the price elasticity of demand and also in the calculations for the cross price elasticity of demand. Also assume that income rose by 10% for the income elasticity of demand calculations.
1. Price Elasticity of Demand is -0.5.
2. Cross Price Elasticity of Demand is -0.5.
3. Cross Price Elasticity of Demand is 0.8.
4. Income Elasticity of Demand is -2.
5. Income Elasticity of Demand is 1.
In a multi-paragraph essay, explain what each type of elasticity is trying to measure and what these numbers predict in each case.
Develop a response that includes examples and evidence to support your ideas, and which clearly communicates the required message to your audience. Organize your response in a clear and logical manner as appropriate for the genre of writing. Use well-structured sentences, audience-appropriate language, and correct conventions of standard American English.