Are motel rooms likely to be necessities or luxuries

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The demand schedule from question 3 above is reproduced below along with another demand schedule when consumer incomes have risen to $60,000 from $50,000. Use this information to answer the following questions. Use the midpoint method to calculate the percentage changes used to generate the elasticities.

124_5fb4b3cd-a2eb-48d0-9d97-161bc8ed84cb.png

a. What is the income elasticity of demand when motel rooms rent for $40?

b. What is the income elasticity of demand when motel rooms rent for $100?

c. Are motel rooms normal or inferior goods? Why?

d. Are motel rooms likely to be necessities or luxuries? Why?

Reference no: EM131098578

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