Income Elasticity. Suppose the price of a pastry cake is $4. When Maxwell’s income was $2000 per month, his monthly demand for pastry cakes was Q = 16 – 2P. When Maxwell got a pay raise and began to earn $4000 per month, his demand shifted to Q = 40 – 2P. Given this information, find Maxwell’s income elasticity for pastry cakes. Hint: You’ll first have to find the two quantities.
Income Elasticity. Suppose the price of a pastry cake is $4. When Maxwell’s income was $2000 per month, his monthly
Hint: You’ll first have to find the two quantities.
Income elasticity of demand alludes to the affectability of the amount demanded a specific commodity to an adjustment in genuine pay of buyers who purchase this commodity, keeping all different things steady. The equation for ascertaining pay flexibility of interest is the per cent change in the amount demanded separated by the per cent change in income. With income elasticity of demand, you can tell if a specific commodity represents a need or an extravagance
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