The average annual income rises from $25,000 to $38,000, and the quantity of bread consumed in a year by the average person falls from 30 loaves to 22 loaves. What is the income elasticity of bread consumption? Is bread a normal or an inferior good?

Principles of Economics 2e
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ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter5: Elasticity
Section: Chapter Questions
Problem 8SCQ: The avenge annual income rises from 25,000 to 33,000, and the quantity of bleed consumed in a year...
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The average annual income rises from $25,000 to $38,000, and the quantity of bread consumed in a year by the
average person falls from 30 loaves to 22 loaves. What is the income elasticity of bread consumption? Is bread a
normal or an inferior good? 

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Step 1

An increase in income from $25000 to $38000 leads to a decrease in consumption of bread from 30 loaves to 22 loaves. 

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