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3 June, 10:25

When Frank's income was $100 per week, 10 units of good A were demanded. Now his income is $150 per week and 12 units of good A are demanded. Using the percentage change formula, the income elasticity of demand for good A equals ___.

a. 0.40

b. 0.45

c. 2.20

d. 2.50

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  1. 3 June, 10:36
    0
    a. 0.40

    Explanation:

    e = % change in demand/% change in income

    = (12 - 10) / 10 / (150 - 100) / 100

    = 0.40

    Therefore, The income elasticity of demand for good A equals 0.04
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