Concept explainers
Income Elasticity of Demand: Computer Usage in the 1990s The following graph shows the probability q that a household in the 1990s with annual income x dollars had a computer, together with the logarithmic curve
a. Compute the income elasticity of demand for computers, to two decimal places, for a household income of $60,000, and interpret the result.
b. As household income increases, how is income elasticity of demand affected?
c. How reliable is the given model of demand for incomes well above $120,000? Explain. d. What can you say about E for incomes much larger than those shown?
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Finite Mathematics and Applied Calculus (MindTap Course List)
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