The accompanying table shows the price and yearly quantity sold of souvenir T-shirts in the town of Crystal Lake according to the average income of the tourists visiting. Price of T-shirt Quantity of T-shirts demanded when average tourist income is $20,000 Quantity of T-shirts demanded when average tourist income is $30,000 $4 3,000 5,000 5 2,400 4,200 6 1,600 3,000 7 800 1,800 a. Using the midpoint method, calculate the price elasticity of demand when the price of a T-shirt rises from $5 to $6 and the average tourist income is $20,000. Also calculate it when the average tourist income is $30,000. b. Using the midpoint method, calculate the income elasticity of demand when the price of a T-shirt is $4 and the average tourist income increases from $20,000 to $30,000. Also calculate it when the price is $7.

/in /by

 

The accompanying table shows the price and yearly quantity sold of souvenir T-shirts in the town of Crystal Lake according to the average income of the tourists visiting.

Price of T-shirt

 

Quantity of T-shirts demanded when average tourist income is $20,000

Quantity of T-shirts demanded when average tourist income is $30,000

$4

3,000

5,000

5

2,400

4,200

6

1,600

3,000

7

800

1,800

a. Using the midpoint method, calculate the price elasticity of demand when the price of a T-shirt rises from $5 to $6 and the average tourist income is $20,000. Also calculate it when the average tourist income is $30,000.

b. Using the midpoint method, calculate the income elasticity of demand when the price of a T-shirt is $4 and the average tourist income increases from $20,000 to $30,000. Also calculate it when the price is $7.

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