For each calculation use the midpoint formula Round your ans

For each calculation, use the midpoint formula. Round your answers to the nearest hundredth. Income Elasticity of Demand Normal or Inferior Good? Sylvia\'s annual salary increases from $102,300 to $109,500, and she decides to increase the number of vacations she takes per year from 3 to 4. Calculate her income elasticity of demand for vacations. nIncome-elastic, Inelastic, or N Blake eats two bags of generic potato chips each day, not buying any name brand chips. Blake\'s hourly wage increasesNumber from $8 to $15, and he decides to eat one name brand bag and one generic brand each day. Calculate Blake\'s income elasticity of demand for generic potato chips Normal or Inferior Good? Income-elastic, Inelastic, or N/A Number Normal or Inferior Good? Becky eats out at Macaroni Grill 3 times per year. She receives a raise from $33,200 to $33,500 and decides to eat out at Macaroni Grill 5 times per year. Calculate her income elasticity of demand for eating at Macaroni Grill Income Elastic, Inelastic, or N/A? Lauren\'s salary decreases from $44,000 to $30.000. She Number Normal or Inferior Good? decides to reduce the number of outfits she purchases each year from 20 to 19 Calculate her income elasticity of demand or new outfits Income-elastic, Inelastic, or N/A?

Solution

Req 1: Change in income: 109500-102300 =7200 Average income: 105900 % change in income: 7200/105900 *100 = 6.80% Change in demand: 1 Average demand: 3.5 % Change in demand: 1/3.5 *100 = 28.57% Income elasticity = 28.57 % / 6.80% = 4.20 Normal goods. Elastic demand Req 2: Change in income;7 Average income: 11.50 % change in income: 7/11.50 *100 = 60.87% Change in demand: -1 Average demand: 1.5 % Change in demand: -1 /1.5 = -66.67% Income elasticity = -66.67% / 60.87% = -1.095 Inferrior goods Elastic Req 3: Change in income: 300 Average income: 33350 % change in income: 300/33350 *100 = 0.899% Change in demand: 2 Average demand: 4 % change in demand: 2 /4 *100 = 50% Income elasticity of demand: 50% / 0.899% = 55.62 Normal goods Elastic demand Rreq 4: Change in income: -14000 Average income: 37000 % change in income: -14000/37000 *100 = -37.84% Change in demand: -1 Average demand: 19.50 % change in demand: -1 /19.50 *100 = -5.13% Income elasticity of demand = -5.13% / -37.84% = 0.136 Normal goods Inelastic demand