Assume that factors that may change demand but are not listed in the table. below do not change during the four months. Answer Q1-Q4 month income price of apple price of banana QP apple QP bañana March 160 3.50 3.00 18 20 April 160 3.50 2.50 20 16 May 220 2.50 3.00 26 24 June 160 2.50 3.00 20 16 1. Calculate the price elasticity of demand for apple. Pick two relevant months for the cal- culation and explain why you picked the two months of your choice. Show your calculations neatly. (3.5 points) 2. Is it True or False that we can say that price elasticity of demand for apple is elastic? Explain the reason. (1.5 points) 3. Calculate the income elasticity of demand for banana. Pick two relevant months for the calculation and explain why you picked the two months of your choice. Show your calcula- tions neatly. (3.5 points) 4. Is it True or False that we can say that banana is a luxury good? Explain the reason. (1.5 points)

Assume that factors that may change demand but are not listed in the table. below do not change during the four months. Answer Q1-Q4 month income price of apple price of banana QP apple QP bañana March 160 3.50 3.00 18 20 April 160 3.50 2.50 20 16 May 220 2.50 3.00 26 24 June 160 2.50 3.00 20 16 1. Calculate the price elasticity of demand for apple. Pick two relevant months for the cal- culation and explain why you picked the two months of your choice. Show your calculations neatly. (3.5 points) 2. Is it True or False that we can say that price elasticity of demand for apple is elastic? Explain the reason. (1.5 points) 3. Calculate the income elasticity of demand for banana. Pick two relevant months for the calculation and explain why you picked the two months of your choice. Show your calcula- tions neatly. (3.5 points) 4. Is it True or False that we can say that banana is a luxury good? Explain the reason. (1.5 points)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 8E: The Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per...

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