Assume that VCRs continue to be sold at $200 per unit while average income increases from $30 thousand to $50 thousand. Assume also that the price for DVD players remains steady at $500. Using the midpoint method, what is the income elasticity of demand?
Demand for VCR's
Price $300
Quantity 167,000
Demand Shifters
Average Income 30,000
Price of DVD players $500
Demand for VCR's
Price $200
Quantity 492,000
Demand Shifters
Average Income 50,000
Price of DVD players $500