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