Intermediate Microeconomics Assignment Example | Topics and Well Written Essays - 250 words

Intermediate Microeconomics - Assignment ExampleEX, Y = % change in quantity demanded of a product X/ % change in monetary value of product Y. = (400+450)/ (5+4)* (4-5)/ (450-400) = (850/9)*(-1/50) = 94.44/-0.02 = -4.722. The negative coefficient depicts an increase in price of computer will result to 4.72 percentages in decrease in demand for printers.Income elasticity of demand assesses the sensitiveness of the demand for a good to a change in the income of the consumers (Mankiw 97). Ed = (A1+A2)/ (Q1+Q2)*(change in Q/change in A) = (10,000+15,000)/ (20+18)* (18-20)/ (15,000-10,000) = (25,000/38)*(-2/5,000) = (657.89*0.0004) = -0.263. As the consumers income increases the demand of the commodity decrease til now though the price remains the same. This implies the goods are of inferior quality thus when income increases consumers opt for better quality products (Mankiw 109).Regressing the logs of independent variables Px, Py and I results to a linear dish up of the amount needed and the independent variables (Mankiw 123). The percent change in quantity demanded is determined by the coefficient of the income I, price of the product X and price of the product