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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

The quantity demanded of good X rises from 130 to 145units as income rises from $2,000 to $2,500 a month. What is the income elasticity of demand for good X?

To determine

The income elasticity of demand.

Explanation

The income elasticity of demand (Ey) can be calculated using the following formula:

Ey=  ΔQdQaverage ΔYYaverage (1)

Here,

ΔQd is the change in quantity demanded.

Qaverage stands for the average of the two quantities demanded.

ΔY is the change in income.

Yaverage stands for the average of the income level

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