Q. Calculate the income elasticity of demand for product X when I= $30. Explain how could we categorize product X? Do you reflect on commodity X a cyclical or non recurring good? Explain why. Do you consider product X a necessity or luxury good? Explain why. Suppose the economy is in a recession and per capita disposable income is expected to decrease by 5%, then what percentage effect on sales would you expect to take place?
At what price would demand be unit elastic, assuming all else equal. Justify your answer