Identify the income elasticity type

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i) The president of the Micro Brewing Corporation asks you, as the company accountant with knowledge in economics, to forecast changes in consumer beer purchases associated with a proposed price change. You conduct a survey and find that if the price of a six-pack increases from $6 to $8 the quantity demanded will decrease from 2,000 units to 1,600 units a month. Should the Micro Brewing Corporation raise its price? Explain the economic rationale using both the Total Revenue Test and the Coefficient of Price Elasticity of Demand. Show your calculations.  Use the information in the table below to identify the income elasticity type of each of the following products, A to D. Show your calculations. 

Product

Percent change in income

Percent change in quantity demanded

Income elasticity type

A

9

12

 

B

-6

6

 

C

3

3

 

D

6

-3

 

Reference no: EM133079450

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