The accompanying table shows the price and yearly quantity sold of souvenir T-shirts in the town of Crystal Lake according to the average income of the tourists visiting. Price of T-Shirt
- The accompanying table shows the price and yearly quantity sold of souvenir T-shirts in the town of Crystal Lake according to the average income of the tourists visiting.
| Price of T-Shirt |
Quantity Demanded I = $20G |
Quantity Demanded I=$30G |
| 4 |
3000 |
5000 |
| 5 |
2400 |
4200 |
| 6 |
1600 |
3000 |
| 7 |
800 |
1800 |
- a) Using the midpoint method, calculate the price elasticity of demand when the price of a T-shirt rises from $5 to $6 when the average tourist income is $20,000. Also calculate it when the average tourist income is $30,000. For each income category, are t-shirt elastic or inelastic?
-
- b) Using the midpoint method, calculate the income elasticity of demand when the average tourist income increases from $20,000 to $30,000 when the price of a T-shirt is $4. Also calculate it when the price is $7.
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- c) Are t-shirts a normal or inferior good?
Apr 01 2020 View more View Less
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