Discuss markets for mobile and landline telephone service

Reference no: EM133662396

Assignment:

?Consider the markets for mobile and landline telephone service. Suppose that when the average income of residents of Betaville is $70,000 per year, the quantity demanded of landline telephone service is 13,500 and the quantity demanded of mobile service is 31,000. Suppose when the average income increases to $75,000, the quantity demanded of mobile service increases to 32,000.

Refer to Scenario 2.

a. Calculate the income elasticity of demand for mobile services.

b. Considering the income elasticity, what type of good is mobile telephone service? Normal or inferior? If it is normal, is it a necessity or a luxury?

Reference no: EM133662396

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