Question

Calculate the elasticity for the following questions (USING THE MIDPOINT (AVERAGE) FORMULA) and indicate if the...

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 16 per barrel to 28 per barrel and as a result, the demand per month for new cars changes from 700 to 150.

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 1,725 to 3,325 per month, the consumption of good X changes from 140 to 225 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 38 to 12 the demand for good X changes from 200 to 650 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 2,300 to 6,600 per month and as a result the demand for new houses increases from 200 to 210 units.


Part 7: The elasticity is



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

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