Midpoint method to compute your cost elasticity

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Reference no: EM1321407

Q. Assume that your demand schedule for DVD's is as follows:

Cost Quantity Demanded
(Income = 10,000 AED) Quantity Demanded
(Income = 12,000 AED)
8 AED 40 DVD's 50 DVD's
10 AED 32 45
12 AED 24 30
14 AED 16 20
16 AED 8 12

a. Use the midpoint method to Compute your cost elasticity of demand as the cost of DVD's increases from 8 AED to 10 AED if

(1) your income is 10,000 AED and

(2) your income is 12,000 AED.


b. Compute your income elasticity of demand as your income rises from 10,000 AED to 12,000 AED if

(1) The cost is 12 AED and

(2) The cost is 16 AED.

 

Reference no: EM1321407

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