Question

Given the estimated demand equation and the following current values of the variables, income elasticity demand for LEE is equal to: PLEE = $18 QLEE = 50,000 (demand for QLEE) PLEVI = $20 PGUESS = $35 Income (INC) = $80,000 Local Target Market Population (POP) = 100,000 Group of answer choices: 2 4 -2 -4 

          Given the estimated demand equation and the following current values of the variables, income elasticity demand for LEE is equal to:

PLEE = $18
QLEE = 50,000 (demand for QLEE)
PLEVI = $20
PGUESS = $35
Income (INC) = $80,000
Local Target Market Population (POP) = 100,000

Group of answer choices:
2
4
-2
-4
Show more…

Added by William H.

Principles of Economics
Principles of Economics
Gregory Mankiw 8th Edition
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Given the estimated demand equation and the following current values of the variables, income elasticity demand for LEE is equal to: PLEE = $18 QLEE = 50,000 (demand for QLEE) PLEVI = $20 PGUESS = $35 Income (INC) = $80,000 Local Target Market Population (POP) = 100,000 Group of answer choices: 2 4 -2 -4
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Transcript

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00:01 Hello, number one, the income elasticity of demand is calculated as the percent change in quantity divided by the percent change in income.
00:10 So here we have a 1 % increase in income leads to a 4 % increase in quantity demanded.
00:15 So therefore we have that the income elasticity.
00:29 And for number two, while the cross price elasticity of demand is found as the percentage change in the quantity demanded of one good divided by the percentage change in the price of a related good...
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