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Aradhya's demand schedule of ice-cream (2077 Section C, Q2)

Aradhya's demand schedule of ice-cream is given as:

Price (RS) Quantity Demanded (Income = Rs. 20000) Quantity Demanded (Income = Rs. 25000)
180 80 100
220 60 80

a. Calculate price elasticity of demand of ice-cream for Aaradhya when the price of ice-cream increases from Rs. 180 to Rs. 220 at both income levels Rs. 20,000 and Rs. 25,000.

b. Calculate income elasticity of demand of ice-cream for Aaradhyas income increases from Rs. 20000 to Rs. 25,000 at prices Rs. 180 and Rs. 220.

c. Compare and interpret the above results.

Solution

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