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Calculating the income elasticity of demand

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Reference no: EM132142617

Question -

A. If the quantity demanded = 600 - 0.75 P, please show your work clearly in estimating the price elasticity of demand at a price of $220. Is demand elastic or inelastic at this price?

B. If the quantity demanded for product W is 190 units when the average weekly income is $880, and if the quantity demanded is 155 units when the average income is $1,000, please show your work clearly in calculating the income elasticity of demand, and classify this product based on its income elasticity of demand.

C. Assume that when the price of good S is $16 per unit, the quantity demanded of product M is 92 units per week, and if the price of S is $12 per unit, the quantity demanded of M is 130 units. Please show your work clearly in calculating the cross-price elasticity of demand between these two products. How would you classify good S and M based on your result?

Reference no: EM132142617

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