Question
Data on price of Y, quantity demand for X when income is 100, and quantity demand for X when income is 200 are given in
Data on price of Y, quantity demand for X when income is 100, and quantity demand for X when income is 200 are given in the following table. The price of X is fixed at $7.
Py QDx (Income $100) QDx (Income $200)
0 121.5 196.5
1 120.2 195.2
2 118.9 193.9
3 117.6 192.6
4 116.3 191.3
5 115 190
6 113.7 188.7
7 112.4 187.4
8 111.1 186.1
9 109.8 184.8
10 108.5 183.5
a. Calculate income elasticity of demand for X using the midpoint method when income increases from $100 to $200 and when price of Y is fixed at $9. Explain your answer.
b. Calculate cross price elasticity of demand for X when price of Y decreases from $9 to $8 and when income is $100. Explain your answer.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started