Answer to Question #5337 in Microeconomics for Jay

Question #5337
Hours/month Total Utility Windsurfing Total Utility Snorkeling 0_____________0____________________0 1_____________60___________________20 2_____________110__________________38 3_____________150__________________53 4_____________180__________________64 5_____________200__________________70 Devon&#039;s total income rises from \$35 to \$55, ceteris paribus. Given that Devon changes his of choice of windsurfing and snorkeling, what is his income elasticity for windsurfing? The correct answer is 0.64. However, I do not know the steps to find this value.
IEd = (Y1+Y2)/(Q1+Q2) * (Q2 - Q1)/(Y2 - Y1) = 90/(Q1+Q2) * (Q2 - Q1)/20 = 4.5*(Q2 - Q1)/(Q2 + Q1) = 4.5*(4 - 3)/(4+3) = 0.64
As the total utility for windsurfing is higher, than for snorkeling, Devon will increase spending time only for windsurfing.

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!