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If demand falls by 5% due to an increase in income by 20%, calculate the income elasticity of demand. What type of commodity is this?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 15CTQ: Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the...

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Question

If demand falls by 5% due to an increase
in income by 20%, calculate the income
elasticity of demand. What type of
commodity is this?

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