suppose that your demand schedule for pizza is as follows: price (dollars) quantity of pizzas demanded...

suppose that your demand schedule for pizza is as follows:

price (dollars)	quantity of pizzas demanded (income= $20,000)	quantity of pizzas demanded (income= $24,000)
8	40	50
10	32	45
12	24	30
14	16	20
16	8	12

Using the midpoint method, your price elasticity of demand as the price of pizzas increase from $14 to $16 is _____ if your income is $20,000 and ______ if your income is $24,000.

if the price of a pizza is $10 your income elasticity of demand is _____ as your income increases from $20,000 to $24,000. However if the price of a pizza is $12 your income elasticity is ____?

Solutions

Expert Solution

Using the midpoint method, your price elasticity of demand as the price of pizzas increase from $14 to $16 is (- 5) if your income is $20,000 and (- 3.75) if your income is $24,000.

if the price of a pizza is $10 your income elasticity of demand is (1.86) as your income increases from $20,000 to $24,000. However if the price of a pizza is $12 your income elasticity is (1.22).

Rahul Sunny answered 2 years ago

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