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(a) Using the midpoint method, calculate the price elasticity of
demand when the price of a T-shirt rises from $5 to $6 and the average
tourist income is $20,000. Also calculate it when the average tourist
income is $30,000. (4 marks)
(b) Using the midpoint method, calculate the income elasticity of
demand when the price of a T-shirt is $4 and the average tourist income
increases from $20,000 to $30,000. Also calculate it when the price is
$7. (4 marks)

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(a) Suppose the average tourist income is $20,000. Using the midpoint method, the percent change in the quantity demanded is... View the full answer

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