(a)Table 2[02]

Quantities Purchased

Quantities Purchased

Income

Prices

Good X

Good Y

$30,000

Px = $6, Py = $3 ( x values)

2 for x1

20 for y1

50,000

Px = $6, Py = $4 (y values)

5 for x2

10 for y2

Refer to Table 2.

(i)Using the information in the table, calculate the income elasticity of demand for good X and characterize the good. Use the midpoint formula.

Ans: Income elasticity= change in quantity demanded/change in income * I1/ Q1 is the formula we have to use cause my answers differ from someone I checked my assignment with

(ii)Can you calculate the income elasticity of demand for good Y? If you can, show your calculation and characterize the good. If you cannot, explain why.

Ans: