1.  

Lazaro currently makes $90,000 per year and goes skydiving 99 times per year. His income elasticity of demand for skydiving is, = 1.3. a. Explain in words what is meant by, = 1.3. b. What percentage of Lazaro's income is spent on skydiving? (Each trip costs $100.) c. Suppose that Lazaro makes a partner and gets a massive raise to $120,000. What is the percentage change in his income? d. What will be the resulting percentage change in his demand for skydiving? e. What is the dollar figure that Lazaro now spends on skydiving? f. What percentage of Lazaro's new income is spent on skydiving? g. Is skydiving an inferior good, a necessity, or a luxury? Explain. h. Sketch the general shape of Lazaro's Engel curve for skydiving, with income on the horizontal axis and skydiving on the vertical axis.