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

Question

Karla Armstrong

Business

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

+4

Answers (1)

Know the Answer?

Butternut · Answer 1

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

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. 0.40b. 0.45c. 2.20d. 2.50

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