(a) Explanation Given Information: The graph shows the percentage q of people in households with annual income x thousand dollars together with the exponential curve q = − 86 e − 0.013 x + 92 . Formula used: Income Elasticity of Demand The income elasticity of demand E is defined as the percentage increase in demand of one item per percentage increase in personal income. E = d q d p ⋅ p q And the demand is elastic if E > 1 , the demand is inelastic if demand is unitary elastic if E = 1 . Calculation: Take derivative of q to get, d q d x = 1.118 e − 0.013 x Consider the formula, E = d q d x ⋅ x q Substitute value of derivative of q as 1.118 e − 0.013 x , value of q as − 86 e − 0.013 x + 92 in the above formula to get, E = d q d x ⋅ x q = ( 1.118 e − 0.013 x ) ⋅ x − 86 e − 0 (b) To determine The elasticity of demand E = 1.118 x e − 0.013 x − 86 e − 0.013 x + 92 for broadband usage with very large incomes.

Student Solutions Manual for Waner/Costenoble's Finite Math and Applied Calculus, 7th

7th Edition

ISBN: 9781337275972

Author: Waner, Stefan; Costenoble, Steven

Publisher: Cengage Learning

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Chapter 12.6, Problem 28E

(a)

To determine

To calculate: The equation income elasticity of demand for broadband usage and the elasticity with annual income $60000 and the graph shows the percentage q of people in households with annual income x thousand dollars together with the exponential curve q=−86e−0.013x+92.

(b)

To determine

The elasticity of demand E=1.118xe−0.013x−86e−0.013x+92 for broadband usage with very large incomes.

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Chapter 12.6, Problem 27E

Chapter 12.6, Problem 29E

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Student Solutions Manual for Waner/Costenoble's Finite Math and Applied Calculus, 7th

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The equation income elasticity of demand for broadband usage and the elasticity with annual income $ 60000 and the graph shows the percentage q of people in households with annual income x thousand dollars together with the exponential curve q = − 86 e − 0.013 x + 92 .

Solution Summary: The author calculates the income elasticity of demand for broadband usage and the exponential curve with annual income 60000.