Refer to the Accompanying Graph A Calculate the Income Elasticity of Demand for Televisions at c

Essay

Refer to the accompanying graph. $\begin{array} { | l | c | c | } \hline \text { Price } & \begin{array} { l } \text { Quantity of } \\\text { Televisions } ( \mathbf { Y } \\= \mathbf { 2 0 , 0 0 0 } )\end{array} & \begin{array} { l } \text { Quantity of } \\\text { Televisions } ( \mathbf { Y } \\= \mathbf { 3 0 , 0 0 0 0 } )\end{array} \\\hline \$ 350 & 250 & 375 \\\hline \$ 450 & 200 & 325 \\\hline \text { \$550 } & 150 & 275 \\\hline \text { \$650 } & 100 & 225 \\\hline \$ 750 & 50 & 175 \\\hline\end{array}$
a. Calculate the income elasticity of demand for televisions at a price of $550.
b. Are televisions a luxury good, necessity good, or inferior good? Explain.
c. Name a good for which consumption would likely fall when there is an increase in income from $20,000 to $30,000. Explain your reasoning.