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24 October, 00:23

When income increases from $2800 to $3600 per month, quantity demanded of Good G decreases from 1,200 units to 800 units. What is the income elasticity of demand for Good G?

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  1. 24 October, 00:42
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    The income elasticity of demand for Good G is 1.17

    Explanation:

    Income elasticity of demand = % change in quantity demanded : % change in income

    % change in quantity demanded = (1200-800) / 1200 * 100 = 400/1200 * 100 = 33.33%

    % change in income = (3600-2800) / 2800 * 100 = 800/2800 * 100 = 28.57%

    Income elasticity of demand for Good G = 33.33% : 28.57% = 1.17
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Home » Business » When income increases from $2800 to $3600 per month, quantity demanded of Good G decreases from 1,200 units to 800 units. What is the income elasticity of demand for Good G?
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