Assume that factors that may change demand but are not below do not change during the four months. Answer Q1-Q4 income price of apple price of banana QP apple QP banana month January 160 3.50 3.00 18 20 February 160 3.50 2.50 20 16 March 220 2.50 3.00 26 24 April 160 2.50 3.00 20 16 1. Calculate the price elasticity of demand for apple. Pick two relevant months for the cal- culation and explain why you picked the two months of your choice. Show your calculations neatly. (3 points) 2. Is it True or False that we can say that price elasticity of demand for apple is elastic? Explain the reason. (1 point) 3. Calculate the income elasticity of demand for banana. Pick two relevant months for the calculation and explain why you picked the two months of your choice. Show your calcula- tions neatly. (3 points) 4. Is it True or False that we can say that banana is a luxury good? Explain the reason. (1 point)
Assume that factors that may change demand but are not below do not change during the four months. Answer Q1-Q4 income price of apple price of banana QP apple QP banana month January 160 3.50 3.00 18 20 February 160 3.50 2.50 20 16 March 220 2.50 3.00 26 24 April 160 2.50 3.00 20 16 1. Calculate the price elasticity of demand for apple. Pick two relevant months for the cal- culation and explain why you picked the two months of your choice. Show your calculations neatly. (3 points) 2. Is it True or False that we can say that price elasticity of demand for apple is elastic? Explain the reason. (1 point) 3. Calculate the income elasticity of demand for banana. Pick two relevant months for the calculation and explain why you picked the two months of your choice. Show your calcula- tions neatly. (3 points) 4. Is it True or False that we can say that banana is a luxury good? Explain the reason. (1 point)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Assume that factors that may change demand but are not
below do not change during the four months. Answer Q1-Q4
income price of apple price of banana QP apple QP banana
month
January
160
3.50
3.00
18
20
February
160
3.50
2.50
20
16
March
220
2.50
3.00
26
24
April
160
2.50
3.00
20
16
1. Calculate the price elasticity of demand for apple. Pick two relevant months for the cal-
culation and explain why you picked the two months of your choice. Show your calculations
neatly. (3 points)
2. Is it True or False that we can say that price elasticity of demand for apple is elastic?
Explain the reason. (1 point)
3. Calculate the income elasticity of demand for banana. Pick two relevant months for the
calculation and explain why you picked the two months of your choice. Show your calcula-
tions neatly. (3 points)
4. Is it True or False that we can say that banana is a luxury good? Explain the reason. (1
point)
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