where income is measured in thousands of dollars. If p = 5, and Y = %3D a. What is the income elasticity? Interpret and explain your result. What type of good is this? b. If the equation is then re-estimated using just dollars instead of thousands of dollars, what will be the effect on the coefficient for Y and the income elasticity? Explain your result. c. How would the income elasticity change if the price were increased to $9.30? Interpret

where income is measured in thousands of dollars. If p = 5, and Y = %3D a. What is the income elasticity? Interpret and explain your result. What type of good is this? b. If the equation is then re-estimated using just dollars instead of thousands of dollars, what will be the effect on the coefficient for Y and the income elasticity? Explain your result. c. How would the income elasticity change if the price were increased to $9.30? Interpret

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The following table below shows the information on price, quantity of goods and income level. Price of Good A Quantity Good A Good B Good C 20 150 80 40 30 100 50 70 Based on the information above, a) Calculate the price elasticity of demand for good A when the price increases from RM 20 to RM 30. (2 marks) b) Calculate the cross-price elasticity of demand for good A and Good B when price increases from RM 20 to RM 30. State the relationship between good A and Good B and give an example of good that has the same relationship with A and good B. (4 marks) c) Calculate the cross-price elasticity of demand for good A and good C when price increases from RM 20 to RM 30. State the relationship between good A and good C and provide an example of good that has the same relationship with A and good C.
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