5 . Problems and Applications Q7

Suppose that your demand schedule for pizza is as follows: Price Quantity of Pizzas Demanded Quantity of Pizzas Demanded (Dollars) (Income = $20,000) (Income = $24,000) 8 40 50 10 32 45 12 24 30 14 16 20 16 8 0.10 0.07 Using the midpoint method, your price elasticity of demand as the 1.22 f pizzas increases from $10 to $12 is 1.57 . if your income is $20,000 and 0.64 if your income is $24,000. 1.86 If the price of a pizza is $10, your income elasticity of demand is 0.07 as your income increases from $20,000 to $24,000. However, if the price of a pizza is $14, your income elasticity is 0.10