Are movies and golf substitute goods complementary goods or independent goods?

Lorena likes to play golf. The number of times per year that she plays depends on both the price of Show more Lorena likes to play golf. The number of times per year that she plays depends on both the price of playing a round of golf as well as Lorenas income and the cost of other types of entertainmentin particular how much it costs to go see a movie instead of playing golf. The three demand schedules in the table below show how many rounds of golf per year Lorena will demand at each price under three different scenarios. In scenario D1 Lorenas income is $70000 per year and movies cost $13 each. In scenario D2 Lorenas income is also $70000 per year but the price of seeing a movie rises to $15. And in scenario D3 Lorenas income goes up to $90000 per year while movies cost $15. Instructions: Round your answers to 2 decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. a. Using the data under D1 and D2 calculate the cross elasticity of Lorenas demand for golf at all three prices. (To do this apply the midpoints approach to the cross elasticity of demand.) At $55 cross elasticity = . At $40 cross elasticity = . At $25 cross elasticity = . Is the cross elasticity the same at all three prices? . Are movies and golf substitute goods complementary goods or independent goods? . b. Using the data under D2 and D3 calculate the income elasticity of Lorenas demand for golf at all three prices. (To do this apply the midpoints approach to the income elasticity of demand.) At $55 income elasticity of demand = . At $40 income elasticity of demand = . At $25 income elasticity of demand = . Is the income elasticity the same at all three prices? . Is golf an inferior good? it is . Show less

QUICK QUOTE

Approximately 250 words