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Emily has decided always to spend one-third of her income on clothing

Emily has decided always to spend one-third of her income on clothing.
a. What is her income elasticity of clothing demand?

b. What is her price elasticity of clothing demand?
c. If Emily’s tastes change and she decides to spend only one-fourth of her income on clothing, how does her demand curve change? What are her income elasticity and price elasticity now?

Suppose that your demand schedule for compact discs is as follows

Suppose that your demand schedule for compact discs is as follows:
PRICE        QUANTITY DEMANDED(INCOME  $10,000)   QUANTITY DEMANDED    (INCOME  $12,000)
$ 8                                40                                                                                              50
10                                 32                                                                                               45
12                                 24                                                                                                30
14                                 16                                                                                                 20
16                                8                                                                                                    12
a. Use the midpoint method to calculate your price elasticity of demand as the price of compact discs increases from $8 to $10 if

(i) your income is $10,000, and

(ii) your income is $12,000.
b. Calculate your income elasticity of demand as your income increases from $10,000 to $12,000 if

(i) the price is $12, and

(ii) the price is $16.

Suppose that business travelers and vacationers

Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston:
QUANTITY DEMANDED   QUANTITY DEMANDED     PRICE (BUSINESS TRAVELERS) (VACATIONERS)
$150                                         2,100                                         1,000
200                                           2,000                                        800
250                                           1,900                                         600
300                                           1,800                                         400
a. As the price of tickets rises from $200 to $250, what is the price elasticity of demand for

(i) business travelers and

(ii) vacationers? (Use the midpoint method in your calculations.)
b. Why might vacationers have a different elasticity than business travelers?