Chapter 5.6, Problem 30E

(a)

To determine

To calculate: The equation income elasticity of demand for internet and the elasticity with annual income $\$60000$. The graph shows the probability $q$ that a household with annual income $\$x$ together with the logarithmic curve $q=0.2802lnx-2.505$.

(b)

To determine

The effect on income elasticity of demand $E=\frac{0.2802}{0.2802lnx-2.505}$ when household income increases.

(c)

To determine

The model of demand $E=\frac{0.2802}{0.2802lnx-2.505}$ which is appropriate for incomes above $\$10000$.

(d)

To determine

The prediction about $E=\frac{0.2802}{0.2802lnx-2.505}$ for larger incomes.