See the individual demand in the table for Fred, Wilma, Barney, and Betty. Price $1 $2 $3
Question:
Price | $1 | $2 | $3 | $4 | $5 | $6 | $7 | $8 | $9 |
Fred | 100 | 90 | 80 | 70 | 60 | 50 | 40 | 30 | 20 |
Wilma | 50 | 47 | 44 | 41 | 38 | 35 | 32 | 29 | 26 |
Barney | 72 | 69 | 66 | 63 | 60 | 57 | 55 | 51 | 48 |
Betty | 150 | 100 | 75 | 55 | 40 | 30 | 25 | 23 | 22 |
a. Calculate the market demand. b. Calculate the price elasticity of demand for each person and for the market as a whole for a price change from $5 and $6. Categorize each as elastic, inelastic, or unit elastic. c. Consider the case where price is $5. Suppose that each person's income rises by 5% (measured using the midpoint method). As a result of this price increase Fred's quantity demanded rises to 70, Wilma's demand rises to 45, Barney's demand is unchanged, and Betty's demand falls to 34. Calculate income elasticity (at the market level) for this good. Explain whether it is a normal good or an inferior good and how you can tell.
Digital Systems Principles And Application
ISBN: 9780134220130
12th Edition
Authors: Ronald Tocci, Neal Widmer, Gregory Moss