Homework Answers
A. Income elasticity of demand = percentage change in demand/percentage change in income = -30/40 = - 0.75
B. Income elasticity of demand = percentage change in demand/percentage change in price = {(14-17)/17}/{(50,000-40,000)/40,000} = -12/17 = -0.70
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Calculate the income elasticities of demand for the following: a. Income rises by 40 percent; demand...
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