Consider the following information regarding price and quantity of flavored milk for two groups of people. Price/unit Quantity/month (Lower income group) Quantity/month (Higher income group) 100 10 210 110 8 200 120 6 190 130 4 180 1. Calculate price elasticities of demand with respect to price for each income group using mid-point method. 2. Is there any difference in elasticity for lower income group when price changed from 100 to 110 and when price changed from 120 to 130? What is the difference and why? 3. What is the difference between price elasticity of demand between each income group? Discuss your answer
Consider the following information regarding price and quantity of flavored milk for two groups of people. Price/unit Quantity/month (Lower income group) Quantity/month (Higher income group) 100 10 210 110 8 200 120 6 190 130 4 180 1. Calculate price elasticities of demand with respect to price for each income group using mid-point method. 2. Is there any difference in elasticity for lower income group when price changed from 100 to 110 and when price changed from 120 to 130? What is the difference and why? 3. What is the difference between price elasticity of demand between each income group? Discuss your answer
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Elastic And Its Application
Section: Chapter Questions
Problem 6PA: Suppose that your demand schedule for DVDs is as follows: Price Quantity Demanded (income = 10,000)...
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Consider the following information regarding price and quantity of flavored milk for two groups of people.
| Price/unit | Quantity/month (Lower income group) | Quantity/month (Higher income group) |
|---|---|---|
| 100 | 10 | 210 |
| 110 |
8 |
200 |
| 120 | 6 | 190 |
| 130 | 4 | 180 |
1. Calculate price elasticities of demand with respect to price for each income group using mid-point method.
2. Is there any difference in elasticity for lower income group when price changed from 100 to 110 and when price changed from 120 to 130? What is the difference and why?
3. What is the difference between price
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