When income goes up from $20,000 to $30,000, demand for product A is going up from 300 to 400. The price of Poduct A is $200. However demand for Product B is going down from 100 to 50. The price of the Product B is $10.
1 is the Product A normal goods or inferior goods?
2. Calculate income elasticity of demand for the Product A, using the mid-point approach.
3 Is the Product B normal goods or inferior goods?
4 Calculate income elasticity of demand for the Product B, using the mid point approach.