Answer to Question #54786 in Macroeconomics for Margie Moran

Question

Can you pls help me solve these problems??

AGUINALDO LABASMASOK WAS PROMOTED FROM CLERK1 TO CLERK2 FROM HIS FORMER SALARY GRADE 2 (P36,000.) TO SALARY GRADE 3 (P38,000)ю CAN YOU DETERMINE HIS INCOME ELASTICITY?

The elasticity of supply is 1 and the elasticity of demand is 2. If demand increases by ten (10%), by what percent will price change?

Answer 1

If salaries are S1 = 36,000 and S2 = 38,000, then we need to know the amount of quantity demanded of some goods to determine income elasticity.

If the elasticity of supply is 1 and the elasticity of demand is 2, and if demand increases by ten (10%), then the price will decrease by 10%/2 = 5%.