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taupeelk613Lv1
9 Apr 2020
1. What would you expect to happen to spending on food at home and spending on food in restaurants during a decline in economic activity? How would income elasticity of demand help explain these changes?
2. The equation for a demand curve has been estimated to be Qd = 100 – 10P + 0.5Y, where Q is quantity, P is price and Y is income. Assume P = 9 and Y = 100.
a. Interpret the equation.
b. At a price of 9, what is price elasticity and what does it mean in terms of the revenue of the company?
c. At an income level of 100, what is income elasticity and what does it mean?
d. Calculate the arc elasticity between a price of 9 and a price of 12
1. What would you expect to happen to spending on food at home and spending on food in restaurants during a decline in economic activity? How would income elasticity of demand help explain these changes?
2. The equation for a demand curve has been estimated to be Qd = 100 – 10P + 0.5Y, where Q is quantity, P is price and Y is income. Assume P = 9 and Y = 100.
a. Interpret the equation.
b. At a price of 9, what is price elasticity and what does it mean in terms of the revenue of the company?
c. At an income level of 100, what is income elasticity and what does it mean?
d. Calculate the arc elasticity between a price of 9 and a price of 12
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2 Jun 2021
