Reference no: EM133083131
Lorena likes to play golf. How many times per year she plays depends on two things: (1) the price of playing a round of golf, and (2) Lorena's income and the cost of other types of entertainment-in particular, how much it costs to see a movie instead of playing golf.
The three demand schedules in the table below show how many rounds of golf per year Lorena will demand at each price under three different scenarios.
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Scenario:
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D1
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D2
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D3
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Income per year:
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$60,000
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$60,000
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$80,000
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Movie Ticket Price:
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$11
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$13
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$13
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Rounds of Golf:
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Quantity Demanded
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Quantity Demanded
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Quantity Demanded
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Price = $55
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15
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10
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15
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Price = $40
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25
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15
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30
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Price = $25
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40
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20
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50
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a. Using the data under D1 and D2, calculate the cross elasticity of Lorena's demand for golf at all three prices. (To do this, apply the midpoints approach to the cross elasticity of demand.)
Instructions: Round your answer to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.
Cross elasticity of Lorena's demand at the price of $55 =
Instructions: Round your answer to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.
Cross elasticity of Lorena's demand at the price of $40 =
Instructions: Round your answer to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.
Cross elasticity of Lorena's demand at the price of $25 =
Is the cross elasticity the same at all three prices? (Click to select) No Yes
Are movies and golf substitute goods, complementary goods, or independent goods? (Click to select) complementary goods substitute goods independent goods
b. Using the data under D2 and D3, calculate the income elasticity of Lorena's demand for golf at all three prices. (To do this, apply the midpoints approach to the income elasticity of demand.)
Instructions: Round your answer to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.
Income elasticity of Lorena's demand at the price of $55 =
Instructions: Round your answer to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.
Income elasticity of Lorena's demand at the price of $40 =
Instructions: Round your answer to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.
Income elasticity of Lorena's demand at the price of $25 =
Is the income elasticity the same at all three prices? (Click to select) No Yes
Is golf an inferior good? (Click to select) No Yes it is (Click to select) a normal good an inferior good