4. Suppose a person with an income of $20,000 per year buys 10,000 oranges per year at a price of $1 per orange. When the person's income rises to $25,000, he or she buys 12,000 oranges per year at the same price per orange. What is the implied income elasticity of demand for oranges? Are oranges a normal good or an inferior good? A necessity or a luxury? Note: Use the Midpoint Elasticity Formula.
4. Suppose a person with an income of $20,000 per year buys 10,000 oranges per year at a price of $1 per orange. When the person's income rises to $25,000, he or she buys 12,000 oranges per year at the same price per orange. What is the implied income elasticity of demand for oranges? Are oranges a normal good or an inferior good? A necessity or a luxury? Note: Use the Midpoint Elasticity Formula.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![10
_Q
20
25](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc9dbca45-0e0e-4f37-a9d5-82deb282dbd4%2F02e506c2-98e3-429f-b125-0583d379e656%2Fus6fcrt_processed.png&w=3840&q=75)
Transcribed Image Text:10
_Q
20
25
![4. Suppose a person with an income of $20,000 per year buys 10,000 oranges per year at a price of $1
per orange. When the person's income rises to $25,000, he or she buys 12,000 oranges per year at the
same price per orange. What is the implied income elasticity of demand for oranges? Are oranges a
normal good or an inferior good? A necessity or a luxury? Note: Use the Midpoint Elasticity Formula.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc9dbca45-0e0e-4f37-a9d5-82deb282dbd4%2F02e506c2-98e3-429f-b125-0583d379e656%2Fp2v1dg_processed.png&w=3840&q=75)
Transcribed Image Text:4. Suppose a person with an income of $20,000 per year buys 10,000 oranges per year at a price of $1
per orange. When the person's income rises to $25,000, he or she buys 12,000 oranges per year at the
same price per orange. What is the implied income elasticity of demand for oranges? Are oranges a
normal good or an inferior good? A necessity or a luxury? Note: Use the Midpoint Elasticity Formula.
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