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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