The first study estimates that the income elasticity of demand for refrigerators in India is 0.4. If incomes were to increase by 5 percent by how much do we expect demand for refrigerators to increase?
I used change in quantity dem / quantity income formula x / 5 = 0,4 x = 2 % change in demand, right?
In the same study the own-price elasticity for refrigerators is estimated to be -0.5. If prices fall by 10 percent, by how much do we expect demand to change.
Same formula: x / -10 % = -0,5 x = 5 % change in demand
The second study estimates demand for Kelvin to be -2.5. How much less of Kelvin do you expect to sell if you raise the price by 10 percent?
Same formula: -2,5 / 10 = - 25 % less?
Please tell me if I am thinking wrong, I never read any economics in college, and now I started university where it solely is economics.
Submitted September 07, 2016 at 08:48PM by evidentx http://ift.tt/2c8jAEU HomeworkHelp
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