Question
Use the following table to answer the following questions. Price of T-shirts Quantity demanded when the average income is $20 000 Quantity demanded when the
Use the following table to answer the following questions.
Price of T-shirts Quantity demanded when the average income is $20 000 Quantity demanded when the average income is $30 000 4 3000 5000 5 2400 4200 6 1600 3000 7 800 1800
a) Calculate the price elasticity of demand when the price of a T-shirt rises from $5 to $6 and the income is $20 000.
Also calculate it when the income is $30 000.
b) Calculate the income elasticity of demand when the price of the average income rises from $20 000 to $30 000 and the price of a T-shirt is $4. Also calculate it when the price is $7.
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