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Genovia has experienced exceptional growth in recent years. Its GDP per capita has increased from around $30,000 to $50,000 in last 5 years. Over the period quantity demanded of personal cars has increased from 450,000 units per year to 600,000 units. Quantity demanded of public transport, however, has declined from 10,000 buses to 7,000 buses. Calculate income elasticity of demand and tell which product is a normal good and which one is inferior.

Genovia has experienced exceptional growth in recent years. Its GDP per capita has increased from around $30,000 to $50,000 in last 5 years. Over the period quantity demanded of personal cars has increased from 450,000 units per year to 600,000 units. Quantity demanded of public transport, however, has declined from 10,000 buses to 7,000 buses. Calculate income elasticity of demand and tell which product is a normal good and which one is inferior.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Genovia has experienced exceptional growth in recent years. Its GDP per capita has increased from around $30,000 to $50,000 in last 5 years. Over the period quantity demanded of personal cars has increased from 450,000 units per year to 600,000 units. Quantity demanded of public transport, however, has declined from 10,000 buses to 7,000 buses. Calculate income elasticity of demand and tell which product is a normal good and which one is inferior.
Transcribed Image Text:Genovia has experienced exceptional growth in recent years. Its GDP per capita has increased from around $30,000 to $50,000 in last 5 years. Over the period quantity demanded of personal cars has increased from 450,000 units per year to 600,000 units. Quantity demanded of public transport, however, has declined from 10,000 buses to 7,000 buses. Calculate income elasticity of demand and tell which product is a normal good and which one is inferior.
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