You Have Hired a Student Intern to Calculate Some Elasticity

question 231

Essay

You have hired a student intern to calculate some elasticity measures so that you can present the findings at a prestigious economics conference.For the measures that follow, provide a quick interpretation, and then determine whether you should trust the intern's work or not.After all, it will be you in front of that critical audience of professionals, not the intern.a) "The income elasticity of demand for movie theatre tickets is -1.5."
b) "The price elasticity of demand for milk is 0.4 in the short run and 0.9 in the long run."
c) "The cross-price elasticity of demand for Cheerios cereal with respect to the price of Wheaties cereal is -2."

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Definitions:

Labour Hours

The total number of hours worked by all employees in a given period, often used to measure workforce productivity.

Labour Productivity

a measure of economic performance that calculates the amount of goods and services produced per hour worked by employees.

Multifactor Productivity

An indicator of economic efficiency that assesses the ratio of total goods and services output to the sum of inputs employed in their production.