Answered: Suppose that when income decreases by…

Suppose that when income decreases by 4%, the quantity of margarine demanded rises by 1%. Knowing this, the income elasticity (EI) for margarine is (A) EI = .25 (B) EI = -1/4 (C) EI = -4 (D) EI = -3

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 6E

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Question

100%

Suppose that when income decreases by 4%, the quantity of margarine demanded rises by 1%. Knowing
this, the income elasticity (EI) for margarine is
(A) EI = .25
(B) EI = -1/4
(C) EI = -4
(D) EI = -3

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