Lorena likes to play golf. The number of times per year that she plays depends on both the price of playing a round of golf as well as Lorena's income and the cost of other types of entertainment'in particular, how much it costs to go 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. In scenario D₁, Lorena's income is $70,000 per year and movies cost $13 each. In scenario D₂, Lorena's income is also $70,000 per year, but the price of seeing a movie rises to $15. And in scenario D₃, Lorena's income goes up to $90,000 per year, while movies cost $15.

 

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.)
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.)
 
 

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D1 D2 D3 $90,000 Scenario: Income per year:| Movie Ticket Price: Rounds of Golf: $70,000 $70,000 $15 $15 $13 Quantity Demanded Quantity Demanded Quantity Demanded Price = $55 15 25 40 10 15 Price = $40 Price = $25 15 20 30 50