1.) Suppose your demand for DVDs is given in the following demand schedule:<?xml
ID: 1180273 • Letter: 1
Question
1.) Suppose your demand for DVDs is given in the following demand schedule:<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
a. What is your price elasticity of demand as the price of DVDs increases from $16 to $18 if (i) your income is $20,000 and (ii) your income is $30,000? Is your demand for DVDs elastic or inelastic?
b. Calculate your income elasticity of demand for DVDs as your income increases from $20,000 to $30,000 if (i) the price is $14 and (ii) the price is $20. Are DVDs a normal good or an inferior good?
Explanation / Answer
a) price elasticity of demand -2.66. demand for DVDs elastic
b) income elasticity of demand for DVDs as your income increases from $20,000 to $30,000 if (i) the price is $14. ans =.81
the price is $20. ans-= income elasticity of demand for DVDs as your income increases from $20,000 to $30,000
is 1.
it is a normal good
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