When Alex's income increased from $5,000 to $7,000, he increased his consumption of bagels from 6 to 10 a month and decreased his consumption of donuts from 14 to 8 a month. Calculate Alex's income elasticity of demand for bagels and donuts.
When Alex's income increased from $5,000 to $7,000, he increased his consumption of bagels from 6 to 10 a month and decreased his consumption of donuts from 14 to 8 a month. Calculate Alex's income elasticity of demand for bagels and donuts.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:When Alex's income increased from $5,000 to $7,000, he increased his consumption of bagels from 6 to 10 a month and decreased his consumption of donuts from 14 to 8 a month.
Calculate Alex's income elasticity of demand for bagels and donuts.
>>> Answer to 2 decimal places.
>>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign.
Alex's income elasticity of demand for bagels is 0.66.
Alex's income elasticity of demand for donuts is
Transcribed Image Text:When the price of a loaf of garlic bread increases by 4 percent, the quantity of lasagna demanded decreases by 2 percent.
Calculate the cross elasticity of demand for lasagna with respect to the price of a loaf of garlic bread.
The cross elasticity of demand for lasagna with respect to the price of a loaf of garlic bread is - 0.5.
>>> Answer to 2 decimal places.
>>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign.
Garlic bread and lasagna are complements
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