Scenario 5-8 Consider the Markets for Mobile and Landline Telephone Service. Suppose

question 202

Short Answer

Scenario 5-8
Consider the markets for mobile and landline telephone service. Suppose that when the average income of residents of Plainville is $55,000 per year, the quantity demanded of landline telephone service is 12,500 and the quantity demanded of mobile service is 28,000. Suppose that when the price of mobile service rises from $100 to $120 per month, the quantity demanded of landline service decreases to 11,000. Suppose also that when the average income increases to $60,000, the quantity demanded of mobile service increases to 33,000.
-Refer to Scenario 5-8. Using the midpoint method, what is the income elasticity of demand for mobile service?

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Definitions:

Computer-Consulting

A service industry focused on advising businesses on how best to use information technology to meet their objectives.

New Clients

Refers to customers or clients who have recently started using a service or buying goods from a business.

Probability Distribution

A mathematical function detailing every potential value and their probabilities that a random variable can assume over a specified interval.

Computer-Consulting

A service field that provides expert advice and solutions in information technology to businesses and individuals.