A statistician estimates a demand curve for visits per year to the health club: Qd =...

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A statistician estimates a demand curve for visits per year to the health club: Qd = 50-10p + 0.5 y, where p is the price of towels per visit (in dollars) and y is household income (in thousands of dollars). There are two groups of users. Group A has a mean income of $40 (thousand), and group B has a mean income of $80 (thousand). Members of both groups must pay $2 per towel each time they visit. a) What are the quantities demanded for two group of users? (2 Marks) b) What is the towel price elasticity for Group A and Group B? Comment. (4 Marks) c) What is the income price elasticity for the two group of users? Comment. (4 Marks) A statistician estimates a demand curve for visits per year to the health club: Qd = 50-10p + 0.5 y, where p is the price of towels per visit (in dollars) and y is household income (in thousands of dollars). There are two groups of users. Group A has a mean income of $40 (thousand), and group B has a mean income of $80 (thousand). Members of both groups must pay $2 per towel each time they visit. a) What are the quantities demanded for two group of users? (2 Marks) b) What is the towel price elasticity for Group A and Group B? Comment. (4 Marks) c) What is the income price elasticity for the two group of users? Comment. (4 Marks)

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a For Group A Q 50 102 0540 10 For Group B Q 50 102 0580 30 b Towel price elasticity for Group ... View the full answer