Question

Question 1 of 30 1 Points When Logan earned $1,000 per week, he purchased 5 karate lessons and 40 gallons of gasoline. When his earnings increased to $1,100 per week, he purchased 6 karate lessons and 43 gallons of gasoline. The income elasticity of karate lessons and gasoline are and __ , respectively. O A. 0.50; 1.33 OB. 0.10; 1.6 OC. 2.00; 0.75 OD. 0.85; 0.15 Reset Selection

Answer 1

Income ($)	Karate Lessons	gasoline
1000	5	40
1100	6	43

% change in income = [(1100 - 1000) / 1000] * 100

% change in income = 10.

% change in karate lesson demanded = [(6 - 5) / 5] *100

% change in karate lesson demanded = 20

% change in gasoline demanded = [(43 - 40) / 40]*100

% change in gasoline demanded = 7.5

Income elasticity of karate lessons = (% change in karate lesson demanded / % change in income)

Income elasticity of karate lessons = (20 / 10)

Income elasticity of karate lessons = 2.

Income elasticity of gasoline = (% change in gasoline demanded / % change in income)

Income elasticity of gasoline = (7.5 / 10)

Income elasticity of gasoline = 0.75

Answer: Option (C)