Just up the road from where I live is a bread shop. Like many others, I often buy our bread there on a Saturday morning.
September 3, 2020
The imaginary nation of Washington prohibits the import of foreign-made pharmaceuticals.
September 3, 2020

John likes to play futsal (football 5×5). The number of times per year that he plays depends on both the price of playing an hour of futsal as well as John’s income and the cost of alternative types of entertainment and, in particular, how much it costs to go see a movie instead of playing futsal. The three demand schedules in the table below show how many games of futsal per year John will demand at each price under three different scenarios. In scenario D1, John’s income is €50,000 per year and movies cost €9 each. In scenario D2, John’s income is also €50,000 per year, but the price of seeing a movie ticket rises to €11. And in scenario D3, John’s income goes up to €70,000 per year while movies cost €11.

Using the data under D1 and D2, calculate the cross elasticity of John’s demand for futsal at all three prices. Is the cross elasticity the same at all three prices? Are movies and futsal substitute goods, complementary goods, or independent goods?

Using the data under D2 and D3, calculate the income elasticity of John’s demand for futsal at all three prices. Is the income elasticity the same at all three prices? Is futsal an inferior good?

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