Elasticity-time! Calculate the elasticity implied by the information given (own-price, cross-price, or income), interpret the elasticity (“For a one percentage point change in…”), and tell me what the elasticity implies about the good or goods.
a) When the price of soft drinks increases by 10 percent, quantity demanded falls 8 percent.
b) Quantity demanded of good X increases 12 percent when the good Y’s price decreases 6 percent.
c) When income goes up 1 percent, quantity demanded of fine wines increases 1.5 percent.