Info in images Ariya likes to play golf. The number of times per year that she plays depends on both the price of playing a round of golf as well asAriya's income and the cost of other types of entertainment-in particular, how much it costs to go see a movie instead of playing golf.The three demand schedules in the table below show how many rounds of golf per year Ariya will demand at each price under threedifferent scenarios. In scenario D1, Ariya's income is $50,000 per year and movies cost $9 each. In scenario D2, Ariya's income is also$50,000 per year, but the price of seeing a movie rises to $11. And in scenario D3, Ariya's income goes up to $70,000 per year, whilemovies cost $11.ScenarioD1D2D3Income per year$50,000$50,000$70,000Price of movie ticket$9$11$11Price of GolfQuantity Demanded$55151015$40251530$25402050Instructions: Round your answers to two decimal places. If you are entering any negative numbers be sure to include a negative sign(-) in front of those numbers. a. Using the data under D1 and D2, calculate the cross elasticity of Ariya's demand for golf at all three prices. (To do this, apply themidpoints approach to the cross elasticity of demand.)At $55, cross elasticity =-1.50 8At $40, cross elasticity =At $25, cross elasticity =Is the cross elasticity the same at all three prices?NoAre movies and golf substitute goods, complementary goods, or independent goods? Complementary goodsb. Using the data under D2 and D3, calculate the income elasticity of Ariya's demand for golf at all three prices. (To do this, apply themidpoints approach to the income elasticity of demand.)At $55, income elasticity of demand =At $40, income elasticity of demandAt $25, income elasticity of demand =Is the income elasticity the same at all three prices?NoIs golf an inferior good?Noit is a normal good

Answered: a. Using the data under Dj and D2,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Ariya likes to play golf. The number of times per year that she plays depends on both the price of playing a round of golf as well as
Ariya's income and the cost of other types of entertainment-in particular, how much it costs to go see a movie instead of playing golf.
The three demand schedules in the table below show how many rounds of golf per year Ariya will demand at each price under three
different scenarios. In scenario D1, Ariya's income is $50,000 per year and movies cost $9 each. In scenario D2, Ariya's income is also
$50,000 per year, but the price of seeing a movie rises to $11. And in scenario D3, Ariya's income goes up to $70,000 per year, while
movies cost $11.
Scenario
D1
D2
D3
Income per year
$50,000
$50,000
$70,000
Price of movie ticket
$9
$11
$11
Price of Golf
Quantity Demanded
$55
15
10
15
$40
25
15
30
$25
40
20
50
Instructions: Round your answers to two decimal places. If you are entering any negative numbers be sure to include a negative sign
(-) in front of those numbers.

a. Using the data under D1 and D2, calculate the cross elasticity of Ariya's demand for golf at all three prices. (To do this, apply the
midpoints approach to the cross elasticity of demand.)
At $55, cross elasticity =
-1.50 8
At $40, cross elasticity =
At $25, cross elasticity =
Is the cross elasticity the same at all three prices?
No
Are movies and golf substitute goods, complementary goods, or independent goods? Complementary goods
b. Using the data under D2 and D3, calculate the income elasticity of Ariya's demand for golf at all three prices. (To do this, apply the
midpoints approach to the income elasticity of demand.)
At $55, income elasticity of demand =
At $40, income elasticity of demand
At $25, income elasticity of demand =
Is the income elasticity the same at all three prices?
No
Is golf an inferior good?
No
it is a normal good

Expert Solution

Step 1: Define the problem

The cross elasticity of demand for a good is the responsiveness of the quantity demand of a good to a change in the price of a related good. In the given case, the cross elasticity of demand for golf at all the given prices of a golf is the responsiveness of the quantity demanded of golf to the price of movie tickets, the alternative type of entertainment.

The formula for the cross elasticity of demand is:

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