Suppose that your demand schedule for DVDs is as follows:
| Price (Dollars) | Quantity of DVDs Demanded (Income = $10,000) | Quantity of DVDs Demanded (Income = $12,000) |
|---|---|---|
| 8 | 40 | 50 |
| 10 | 32 | 45 |
| 12 | 24 | 30 |
| 14 | 16 | 20 |
| 16 | 8 | 12 |
- Using the midpoint method, what is your price elasticity of demand as the price of DVDs increases from $8 to $10 if your income is $10,000 and if your income is $12,000?
- If the price of a DVD is $12, what is your income elasticity of demand as your income increases from $10,000 to $12,000? What is the income elasticity if the price of a DVD is $16?