3. Suppose that as the income level increases by 10% that the quantity demanded of that same item increases by 6%. a. Calculate the income elasticity of demand. b. What two things does the value in a tell you about the good in question?

3. Suppose that as the income level increases by 10% that the quantity demanded of that same item increases by 6%. a. Calculate the income elasticity of demand. b. What two things does the value in a tell you about the good in question?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 31CTQ: Economists define normal goods as having a positive income elasticity. We can divide normal goods...

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