Economics: Elasticity Theory – #263


Question: A typical consumer behaved in the following manner with respect to purchases of butter over the past eight years:

Year Price of Butter
($/pound)
Quantity of Butter Purchased Real Income
($)
Price of Margarine
($/pound)
1 0.95 200 11000 0.65
2 1.1 180 11000 0.65
3 1.1 190 11500 0.65
4 1.1 200 11500 0.9
5 1.15 170 11500 0.9
6 0.99 190 11500 0.9
7 0.99 175 10500 0.9
8 0.99 150 10500 0.65

Compute all meaningful price, incoMeand cross-elasticity coefficients. (Remember that the effects of the other factors need to be held constant when computing any of these coefficients).

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