View the step-by-step solution to: Lorena likes to play golf. The number of times per year that she

Lorena likes to play golf. The number of...
This question was answered on Sep 18, 2011. View the Answer
Lorena likes to play golf. The number of times per year that she plays depends on both the price of playing a round of golf as well as Lorena’s income and the cost of other types of entertainment—in particular, how much it costs to go see a movie instead of playing golf.

The three demand schedules in the table below show how many rounds of golf per year Lorena will demand at each price under three different scenarios. In scenario D1, Lorena’s income is $50,000 per year and movies cost $9 each. In scenario D2, Lorena’s income is also $50,000 per year, but the price of seeing a movie rises to $11. And in scenario D3, Lorena’s income goes up to $70,000 per year, while movies cost $11.

Scenario: D1 D2 D3
Income: $50,000 $50,000 $70,000
Movie Price: $9 $11 $11
Golf: Quantity Demanded Quantity Demanded Quantity Demanded
Price = $50 15 10 15
Price = $35 25 15 30
Price = $20 40 20 50

a. Using the data under D1 and D2, calculate the cross elasticity of Lorena’s demand for golf at all three prices. (To do this, apply the midpoints approach to the cross elasticity of demand.)

Instructions: Enter only whole number for your answer.

Cross elasticity of Lorena’s demand at the price of $50 =

Instructions: Round your answer to two decimal places.

Cross elasticity of Lorena’s demand at the price of $35 =

Instructions: Round your answer to two decimal places.

Cross elasticity of Lorena’s demand at the price of $20 =

Is the cross elasticity the same at all three prices?

Are movies and golf substitute goods, complementary goods, or independent goods?

b. Using the data under D2 and D3, calculate the income elasticity of Lorena’s demand for golf at all three prices. (To do this, apply the midpoints approach to the income elasticity of demand.)

Instructions: Round your answer to one decimal place.

Income elasticity of Lorena’s demand at the price of $50 =

Instructions: Enter only whole number for your answer.

Income elasticity of Lorena’s demand at the price of $35 =

Instructions: Round your answer to two decimal places.

Income elasticity of Lorena’s demand at the price of $20 =

View the entire interaction

Dear Student Please find attached s... View the full answer

Economics -  ..doc

Lorena likes to play golf. The number of times per year that she plays depends on both the price of
playing a round of golf as well as Lorenas income and the cost of other types of entertainmentin...

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors and customizable flashcards—available anywhere, anytime.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access or to earn money with our Marketplace.

    Browse Documents
  • 890,990,898

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
  • 890,990,898

    Flashcards

    Browse existing sets or create your own using our digital flashcard system. A simple yet effective studying tool to help you earn the grade that you want!

    Browse Flashcards