When Steven graduated from university and got a job, his income rose from $15,000 to $60,000. His consumption habits also changed drastically. For instant noodles, his consumption falls from 7 packs a week to zero. For movies, his consumption rises from 1 per year to 11 per year. (i) Calculate his income elasticity of demand for both instant noodles and movies using the midpoint formula. (6 marks) (ii) Explain how you would classify the two goods, instant noodles and movies, based on the income elasticity of demand. (2 marks) (iii) Define what the income elasticity of demand measures. If more consumption is generally preferred to less consumption, why do some goods have negative income elasticities? (4 marks) (iv) If the economy enters a recession, how would this affect the revenues of the seller of instant noodles and the movie theatre operator? Explain. (3 marks) Question 2 (a) You have decided to spend $40 this month on Fish and Bread. The total utility you receive from different quantities of fish and bread are shown in the table below. The prices of fish and bread are both $10 per unit. Managerial Economics