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Calculate income elasticity of demand as income

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Reference no: EM132511510

Problem: Suppose that your demand schedule for pizza is as follows: Quantity Demanded Quantity Demanded

Price (income 5 $20,000) (income 5 $24,000)

$8 40 pizza 50 pizza

10 32 45

12 24 30

14 16 20

16 8 12

a. Use the midpoint method to calculate your price elasticity of demand as the price of pizza increases from $8 to $10 if (i) your income is $20,000 and (ii) your income is $24,000.

b. Calculate your income elasticity of demand as your income increases from $20,000 to $24,000 if (i) the price is $12 and (ii) the price is $16.

Reference no: EM132511510

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