5) In a certain neighborhood, the income elasticity of demand for pay-per-view music concerts is 1.6,...

5) In a certain neighborhood, the income elasticity of demand for pay-per-view music concerts is 1.6, and the average annual amount which people with an annual income of $40,000 spend on pay-per-view music concerts is $20.

a) [3 points]. Circle the correct italicized answer. According to the above statement and the economic definitions of these terms, pay-per-view music concerts are [[ inferior goods / necessities / luxuries ]].

b) [ 7 points] If someone’s income increases from $40,000 to $57,500, what do you expect to be the new amount which this person will spend on pay-per-view music concerts each year? Round to the nearest dollar

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Rahul Sunny answered 1 year ago

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