Question

Calculate the elasticity for the following questions (USING THE MIDPOINT (AVERAGE) FORMULA) and indicate if the goods are: 1. Inferior, 2. Normal, 3. Complements, or 4. Substitutes (Please Include The Negative signs in your answers where appropriate and calculate to 2 decimals)

A. The price of gasoline increases from 24 per barrel to 40 per barrel and as a result, the demand per month for new cars changes from 550 to 100.

Part 1: The elasticity is Part 2: These goods are (answer using numbers, 1-4)

B. As a result of a change in income from 1,850 to 3,350 per month, the consumption of good X changes from 460 to 300 units.

Part 3: The elasticity is Part 4: Good X is a(an) (answer using numbers, 1-4)

C. As a result of a decrease in the price of good Y from 27 to 10 the demand for good X changes from 250 to 400 units.

Part 5: The elasticity is

Part 6: These goods are(answer using numbers, 1-4)

D. As a result of an economic boom in Calgary, the average income increases from 2,900 to 4,000 per month and as a result the demand for new houses increases from 160 to 260 units. Part

7: The elasticity is

Part 8: New houses are a(an) (answer using numbers, 1-4

Answer 1

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