1. Use Exhibit 1. Which of the following statements is (are) correct? (x) Using the midpoint method, the coefficient of income elasticity of demand for Good J is negative 1.5 and for Good K it is equal to positive 1.25. (y) Good J is less income elastic than Good K. (z) Good J is an inferior good. Good K is a normal good. A. (x), (y) and (z) С. Exhibit 1 Income Quantity Purchased Good J Good K $48,000 $52,000 318 units 190 units (x) and (y) only D. (y) and (z) only В. 282 units 210 units (x) and (z) only E. (z) only

5. If the price elasticity of demand for a good is 1.5, we would say that its demand is  a)inelastic b)elastic c)increasing d)normal

When a negative income elasticity for a good results in income increases leading to a decline in demand for that good we can say that the good can be termed either: (a)  Normal Good (b)  Inferior Good (c)  Compliment d)  Substitute    Which is it?

b) Price elasticity of demand: P₁ = $150, P₂ = $230, Q₁ = 4,000, Q₂ = 2,000. Use the midpoint formula for percent change and show all your work, then complete these sentences: ● %, When the price rose the Quantity demanded fell So demand is relatively The price elasticity of demand = %. (elastic or inelastic)