An individual's income rises from $77 comma 000 per year to $82 comma 000 per year, and as a consequence the person's purchases of movie downloads rise from 2 per month to 4 per month. This individual's income elasticity of demand is . (Enter you response rounded to 2 decimal places.)Therefore, movie downloads are goods.

16.67

normal

Explanation:

Income Elasticity of Demand =

% change in movie downloads = (4 - 2) / 2

% change in movie downloads = 2 / 2

% change in movie downloads = 1

or

% Change in quantity demanded = 100%

% change in income = ($82,000 - $77,000) / $77,000

% change in income = $5,000 / $77,000

% change in income = 0.06

or

% change in income = 6%

Income Elasticity of Demand = 100% / 6%

Income Elasticity of Demand = 16.67

When the Income Elasticity of Demand is positive, it is usually Normal Goods. As Income goes up, similarly the movie downloads or quantity demanded going up. So, this is a normal good.

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.

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