Essentials of Economics 7th Edition by Gregory Mankiw

Exercise 4

Suppose that your demand schedule for compact discs is as follows:

a. Use the midpoint method to calculate your price elasticity of demand as the price of compact discs increases from $8 to $10 if (i) your income is $10,000 and (ii) your income is $12,000.
b. Calculate your income elasticity of demand as your income increases from $10,000 to $12,000 if (i) the price is $12 and (ii) the price is $16.